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2015SD Q1 vs 2020Mar Q1: total value attributable to acquiree company

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › 2015SD Q1 vs 2020Mar Q1: total value attributable to acquiree company

  • This topic has 3 replies, 2 voices, and was last updated 3 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • June 5, 2021 at 8:13 pm #623331
    amysnowy
    Participant
    • Topics: 72
    • Replies: 25
    • ☆☆

    Dear tutor:

    in 2015 Q1, total value to acquiree company= MV equity + MV debt + premium
    in 2020 Q1, total value to acquiree company= MV debt + premium

    why MV equity omitted in 2020Mar Q1? should it include in? but if it includes MV equity, the value attributable to acquirer would be negative.

    thanks

    June 6, 2021 at 8:52 am #623373
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54656
    • ☆☆☆☆☆

    I do not understand what you mean because the MV of equity has not been omitted.

    Which part of the answer are you referring to?

    June 6, 2021 at 11:34 am #623409
    amysnowy
    Participant
    • Topics: 72
    • Replies: 25
    • ☆☆

    in 2020, value attributable to M investors=14375+6500, premium +MV debt,
    in 2015, value attributable to A investors=2100+9000+7350, MV equity+ MV debt+ premium,

    two questions have the similar logic, unbundle part of business, calculate PV after unbundling+ value of sell-off (+PV synergies in 2020) – value to acquiree company.

    June 6, 2021 at 4:42 pm #623474
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54656
    • ☆☆☆☆☆

    In the 2020 question, 14,375 is not the premium!!

    It is the current market value of the equity ($12,500) plus the premium of 15%.

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