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PURSUIT CO (JUN 11 ADAPTED)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › PURSUIT CO (JUN 11 ADAPTED)

  • This topic has 2 replies, 2 voices, and was last updated 5 years ago by John Moffat.
Viewing 3 posts - 1 through 3 (of 3 total)
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  • January 20, 2021 at 2:31 am #607228
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    “Pursuit Co estimates that a payment of the equity value plus a 25% premium would be sufficient to secure the purchase of Fodder Co.”

    Sir just going by the above statement how do we know that 25% premium is payable over the MV of equity(PV of FCFE) and not the firm(PV of FCF to firm)?

    January 20, 2021 at 5:21 am #607232
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    or is it always so the case that debt holders are never given any premium and only shareholders can ever get any premium, if it does get paid

    January 20, 2021 at 9:14 am #607255
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54835
    • ☆☆☆☆☆

    Any premium goes to the shareholders – it is the shareholders who are being paid when the company is purchased.

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