What could be increase in hostile takeover activity in japan

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Reference no: EM133297349

Article: Shareholder activist readies hostile takeover of Toshiba unit

Question: Hostile takeovers in Japan are a relatively new phenomenon. In general, how strong is the hostile takeover market around the world? According to our class discussions, what could contribute to the increase in hostile takeover activity in Japan?

According to the article, Mr. Yoshiyaki Murakami has secretly bought 11.49% of the shares. Assume that his tender offer for ¥3,456 per Toshiba Machine shares (to buy 43.82% of the shares for ¥25.9 billion) reflects a 19% premium over the price he paid on his initial stake. Assume also that the tender price reflects the true value of the company under Mr. Murakami. What would be Mr. Murakami's financial gains from the takeover deal if it went through?

In response to the takeover attempt, the company warned that it is going to issue a poison pill. Suppose that the company has decided to issue the pill with the following conditions: The pill is triggered at 15% ownership. Upon the triggering event, for each share they hold, shareholders can buy 10 additional shares at a price of ¥1000. Assume that Mr Murakami decides to increase his stake to 15% and that the stock price just before the pill is triggered is ¥2900. Calculate the effect of triggering the pill on Mr. Murakami's ownership and value.

Reference no: EM133297349

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