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part c iii) of this question asks: “Evaluates the financial and other factors that both Lahla Co’s shareholders and Kawa Co’s shareholders would consider prior to agreeing to the acquisition, and the impact on Lahla Co’s capital structure under each payment method”
model answer to part c iii) has referred that: “Therefore, it is recommended that Lahla Co should consider equity finance through a partial listing. This would also enable Kawa Co’s shareholders to trade their shares and thereby make the deal look better for them”. I do not understand how Lahla Co can raise equity finance through a partial listing and also enable Kawa Co’s shareholders to trade their shares? Please help me to explain this. ThanksAs Lahla is unlisted it will be hard for shareholders to find someone to buy their shares should they want to sell. If there is a partial listing then it will be easier to sell their shares on the stock exchange.
As far as a partial listing is concerned, it is simply when only some of the shares are listed on a stock exchange (and those shares are then easily traded).
what i really want to ask is that how Lahla Co can SIMULTANEOUSLY raise equity finance and also enable Kawa Co’s shareholders to trade their shares through a partial listing? Because I think that Lahla Co can firstly enable Kawa Co’s shareholders to trade their shares through a partial listing . After that, Lahla Co will issue equity to raise finance. But Lahla Co cannot SIMULTANEOUSLY do these 2 things
Firstly, Lahla are not at the moment proposing to raise more equity finance (they intend to raise the money from debt, although it may be more sensible for them to consider raising more equity). The could just arrange a partial listing for some of the shares that already exist.
Secondly, even if they do raise more finance by issuing new shares, it does not have to be simultaneous with giving shares to Kawa’s shareholders. They don’t have to do both at the same time.
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