Company Y has 4 million shares in issue and Company Z 10 million. On day 1 the market value per share for Company Y is £

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Company Y has 4 million shares in
issue and Company Z 10 million. On day 1 the market value per share
for Company Y is £3.50, and for Company Z is £5.00. On day 2, the
management of Company Z decides at a private meeting, to make a
cash takeover bid for Company Y at a price of £5.00 per share. The
takeover will produce large operating savings with a value of £8
million. On day 4, Company Z publicly announces an unconditional
offer to purchase all the shares of Company Y at a price of £5.00
per share with settlement on day 20. Details of the large savings
are not announced and are not public knowledge. On day 12, Company
Z announces details of the savings, which will be derived from the
takeover.
Required:
In each of the following
circumstances:
(15
marks)
(35 marks)
In this section students should
demonstrate understanding, knowledge, and an ability to critically
evaluate the differing theoretical viewpoints associated with
differing structure of market efficiency. The response should
attempt to incorporate a critical perspective through relevant
academic referencing, rather than overly describing the differing
models. Attempting to evaluate within a practical, real-life
business context through investigation of academic empirical
findings will assist in developing the response.