- This topic has 1 reply, 2 voices, and was last updated 2 years ago by
.
- Posts
Hi John,
When a firm offers shares to buy another firm, I am getting a little confused when calculating the gains to share holders of each company because the calculation showing in Chakuka MJ21 and Hav Co are a little different to each other.
When the new shares are issued to the target company, how do you actually value these shares? I thought we used the post acquisition share price to value these shares and work out the difference?
Or, should we value these new shares using the pre acq share price of the Predictor? like Hav Co? (please note, Hav Co actually offered mix consideration share+cash)
Thank you
It depends on what the question asks and on whose behalf you are looking at things.
For the acquiring company we look at the new market value of the shares. They have the information to be able to estimate what will happen to the market value.
However if looking to see whether the shareholders of the target company will decide on whether to be taken over, they will be looking at the current market value of the shares in the acquiring company, because they do not have the information needed to be able to estimate the new value.
- You must be logged in to reply to this topic.