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Sir,
When estimating the impact on MAKONIS CO’s shareholder why share for share exchange wasn’t taken into consideration????
Will it be wrong if i take it into consideration???
I mean if i calculate like this
Mv of Nuvola co = $480m
Makonis offered including 30% premium =(100m share*$5.80)+$144m=$724mAdditional amount offered = $(724-480)m = $244m
Impact =$(503.94-244)m=$259.9m
Additional value per share =
$(259.9/210)m=$1.24Another thing why in bpp kit additional value per share in this question was calculated by dividing additional value by 210m share. Shouldn’t it be 310m share????
You would be wrong, because the premium paid to Nuvola has to be 30% of what the shareholders in Nuvola are currently worth.
They were worth 480M. Your solution would end up with them being worth 724M, which would be a premium of 244M. This would be a premium of 244/480 = 51% !!!
Your other question puzzles me because I can’t find anywhere in either BPP’s answer (or the examiners own answer), the figures you are quoting! (I am using the latest edition of the Revision Kit, so maybe they have changed the answer).
However, using your figures, the total additional value is 503.94, but only 159.9 of it goes to Makonis current shareholders, and the current shareholders own 210m shares.
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