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Hello Sir,
Apologies for another question but as you can imagine the time is getting close.
I was just wondering about shave valuations for mergers. In the Specimen Exan (Hav Co) it is the current (pre-combination) share price which is used to calculate the share value for the offer however in Sept ’18 (Selorne & Chawon) it is the combined company’s estimated share price which is used to calculate the premium on the offer.
Would either of these suffice depending on justification or am I missing something??
Thanking you again,
John
It really depends on from which shareholders point of view we are looking at it.
As far as the company doing the acquiring is concerned, they will know what is likely to happen to the share price after the acquisition and so will make decisions based on this new share price.
However, from the point of view of the shareholders of the company being acquired, they do not have access to the same information and so are likely to base their decisions on the current share price of the acquiring company.
If it is not clear from the question as to whose point of view we are looking at (and sometimes it is not very clear), then state your assumption and you will then get the marks.
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Thank you very much
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