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Kerrin’s premium

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Kerrin’s premium

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • Author
    Posts
  • October 24, 2021 at 11:52 am #638975
    Kira0896
    Member
    • Topics: 5
    • Replies: 1
    • ☆

    Good evening, Sir

    When the question states ”Recent mergers have attracted an acquisition
    premium of around 25%–30%”, the answer revealed the premium is 30% instead of 25% in share for share offer.

    May I know why is 30% premium chosen? Is it because Danton Co’s directors indicated their shareholders would be expecting a premium towards the higher end of this scale for a share-for-share offer?

    Kindly explain it so that I can understand well.

    I would appreciate if Sir is willing to allocate your time on answering this question.

    Thanks and stay safe.

    October 24, 2021 at 3:09 pm #639000
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51576
    • ☆☆☆☆☆

    Yes – the reason you give is the reason (that the shareholders would be expecting a premium towards to higher end of the scale).

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