Question 2 (Total 20 marks) a. How poison pills can be used as an anti-takeover defence strategy by a target company and

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Question 2 Total 20 Marks A How Poison Pills Can Be Used As An Anti Takeover Defence Strategy By A Target Company And 1 (41.78 KiB) Viewed 35 times

Question 2 (Total 20 marks) a. How poison pills can be used as an anti-takeover defence strategy by a target company and why regulatory authorities seek to outlaw the use of poison pills? (10 marks) b. An acquiring company agrees to purchase a target company, where under the terms of agreement, the target company's shareholders will receive one share of the Acquiring company's stock for every four shares of the Target company's stock they hold. Acquiring company's share price prior to the announcement was $80.00. Target company has 30 million shares outstanding. What type of M&A transaction is this? Calculate the value to the target per share and the equity value of the target company. (8 marks) C. How does an increase in price of share of acquiring company affect the value to the target in stock-on-stock transaction with fixed exchange ratio structure? (2 marks)