In the chapter opener, you learned that with Brookdale Senior Living's stock price trading around $12.35 per share, one of the firm's investors proposed an idea that might net the firm's shareholders $21 per share in cash. Suppose that Brookdale acted upon the suggestion of Land and Buildings and that as a result Brookdale was able to distribute $21 per share in cash to its investors. Suppose that after selling its real estate assets and paying out cash to shareholders, Brookdale's shares were worth $5 per share. Are Brookdale's investors better or worse off? Specifically, calculate the percentage change in the wealth of share-holders (including the cash they received and the change in the value of their stock) that would hypothetically occur if Brookdale acted according to this plan.
Now suppose that Brookdale had 185.45 million shares outstanding. What is the total dollar value of wealth created (or destroyed) by the restructuring proposed by Land and Buildings?
In the chapter opener, you learned that with Brookdale Senior Living's stock price trading around $12.35 per share, one
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