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BPP revision kit Q.28 Makonis

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › BPP revision kit Q.28 Makonis

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • August 16, 2022 at 12:26 pm #663189
    Ron123
    Participant
    • Topics: 72
    • Replies: 93
    • ☆☆

    Hi, please may I know the meaning of this sentence in the case scenario (in the last paragraph):

    “Makonis Co has offered to acquire Nuvola Co through a mixed offer of one of its shares for two Nuvola Co shares plus a cash payment, such that a 30% premium is paid for the acquisition.”

    Does it mean that (based on the sample answer), the share-for-share offer now implies a premium of $0.50 per share (as per calculated). Then, a 30% premium for cash offer implies a premium of $0.72 per share. However, the $0.50 is already paid via share-for-share offer, so the cash payment to be paid now is only $0.22 per Nuvola share?

    ** If I were to be given another scenario, where the share-for-share offer already implies a premium of $0.90 per share, and a 30% premium for cash offer still implies a premium of $0.72 per share, then there will be no more cash offer already, since the $0.90 per share already cover all the costs?

    August 17, 2022 at 8:18 am #663239
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 53348
    • ☆☆☆☆☆

    I am confused by your question. The payment is being made partly in shares and partly in cash (not one or the other but a mixed offer).

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