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Dear John,
I would like to ask about M&A
in part 3 Question 2, June 2013 and part a question 3 December 2012. The requirement of both questions is to estimate the percentage gain on a target’s share under each of the three payment method.in both questions, the way it calculated premium percentage is totally different
– share-for-share exchange
– bond offer.Could you please explain to me about this difference?
Many thanks
It is very confusing, and to be honest you would get most (if not all) of the marks by doing both in the same way.
The reason is a tiny bit of the wording in the question. In one of the questions you are looking at it from the point of view of the acquirer, and they will have knowledge about what will happen after the acquisition. In the other question, it is more looking at it from the point of view of the company being acquired – their shareholders will not have knowledge of the future benefits.
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