Sigra co (dec 12)

This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.

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July 30, 2018 at 2:10 pm #465263
fahad132
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Hi Sir,

part(a) option two
Calculation regarding the exchange of 3 shares for 2 shares is confusing
is there any alternative solution for that i can come up with
please how can we go with any other easy approach for that if any ??
i can rote this technique but in exam if i find something else will find difficulty for me
July 30, 2018 at 4:02 pm #465279
John Moffat
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You will have to say which bit you find confusing.

There are currently 500,000/0.4 = 1,250,000 shares in Dentro.

If they are getting 3 shares for every 2 shares, then they will get 1,250,000 x 3/2 = 1,875,000 shares in Sigra.

There is no alternative solution!!
July 30, 2018 at 5:33 pm #465288
fahad132
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confusion part is

gain per dentro co share = (3 * 3.644) – (2 * 4.50)/2 = $0.966

if they already arrived at 1,875,000 shares why mutliply combined share price by 3 and then dentro co share price by 2 and deducting one from another.
July 31, 2018 at 8:04 am #465373
John Moffat
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Because they end up with 3 shares in Sigra worth 3.644 each for every 2 shares they used to hold in Dentro which were worth 4.50 each.
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