Will be a prisoner dilemma

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Suppose Walt Disney owns a 15% stake in Pixar. Disney would like to acquire majority control by increasing their stake to 51%. Pre-bid, Pixar's share price is $62. Walt Disney makes a two-tier tender offer: it offers $70 for an additional 36% and only $64 for the rest. Assume that the blended offer is $66.

Problem 1: Will there be a prisoner's dilemma if the alternative offer is $65? What will the shareholders do? Explain your answer.

Reference no: EM132974101

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