The raider can make a profitable takeover bid

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Trisco has 20m shares outstanding that are currently selling at £20 per share. A raider believes that these shares would be worth £40 per share if he was able to control 51% of the shares and hence able to implement a few changes. The costs of mounting the take-over bid are £25m. He can accumulate 5% of the shares before having to make a formal tender offer for the additional 46%. The stock market is efficient and shareholders behave rationally. Explain carefully whether or not the raider can make a profitable takeover bid.

Reference no: EM131535427

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