Makonis Co (12/13) — OpenTuition Forums

KKim10y ago

Dear Sir, I am reading BPP Rev Kit the question Makonis (c). In the solution for (c), If 50% premium is offered to Nuvola Co's equity holders, then they will expect $240 million premium or %1.2 per share, and thererore the cash paid will be $0.7 per Nuvola Co share or $140mil in total. How can we get the figure $0.7 per Nuvola Co share? Thanks, KT

John MoffatTutor10y ago#1

Giving them one M share for every two N shares implies a premium of $0.50 per N share (see the first line of the answer to part (c)). Since they will expect a total premium of $1.20 per share, the amount they will get in cash will be $1.20 - $0.50 = $0.70 per share.

KKim10y ago#2

Thanks so much

John MoffatTutor10y ago#3

You are welcome :-)

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