Hi, good day. I would like to ask.. for share-for-share exchange, if A offers 3 shares in A for 2 share in B, then the value of B's share now is "A's share value / 2 * 3"?
As for premium, when C acquires D, if C's share price is $100, and D's share price is $70, then the premium that the acquiree (D) is going to get is $100 - $70 = $30?
Are they correct? Thank you.
Ask the Tutor ACCA AFM
Acquisition (share-for-share exchange & premium)
3y ago#1Yes - they are correct :-)
For Past Year March/June 2021, sample answer Section A, Appendix 3, under share-for-share offer, please may I know why the additional shares issued by Lahla Co is calculated as 2,000m / 3 = 667m? The 2,000m is the Kawa Co's number of shares.. isn't it supposed to be Lahla Co's number of shares divided by 3, since it is 1 Lahla share for 3 Kawa shares?
Thank you.
3y ago#3If it is one share of Lahla for every 3 in Kawa, then the number of Lahla shares will be the number in Kawa divided by 3.
Oh.. for Lahla/Kawa scenario, it is about the NUMBER of shares. As for the A/B scenario above (3 A shares for 2 B shares), it is about the VALUE of shares. So, that's the difference, am I right? :)
3y ago#5Correct :-)
Topic lockedNew replies are closed.