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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › PURSUIT CO (JUN 11 ADAPTED)
“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)?
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
Any premium goes to the shareholders – it is the shareholders who are being paid when the company is purchased.