estimate the total synergies, Financial Accounting

Assignment Help:

Dietz&Dow Industries (DDI) makes an unexpected takeover bid for Hein & Hillgen Instruments (HHI). DDI offers to pay $50 per share of HHI, which represents a 25% premium over the prior day's closing price of HHI of $40. Upon announcement of the bid, the share price of HHI rises to about $50, while the share price of BBI increases from $25 to $27. Currently, DDI has 400 million shares outstanding, whereas HHI has 100 million shares outstanding.

(a)    Does the market believe that the acquisition would be a positive NPV project for the shareholders of DDI? Explain your reasoning.

(b)   Estimate the total synergies that the market believes are created by this merger. Which company captures most of the synergies? Show your calculations.

(c)    A week after the takeover offer from DDI, rumors hit the market that a third company might enter the bidding contest. In response HHI's share price increases to $55, and DDI's CFO is considering modifying its bid for HHI. What is the maximum price per share that DDI can prudently bid? Explain fully.

 (d)   When a day later a third party, Laor & Levick International, indeed enters the bidding contest and offers $60 per share for HHI, shares of DDI drop to $24 upon the announcement. Give two explanations as to why DDI's share price might drop. 

 

 


Related Discussions:- estimate the total synergies

Extract the term structure of interest rates, Extract the term structure of...

Extract the term structure of interest rates out to 3 years given the following bond data: Maturity (yrs)    Coupon rate (%)   Yield to maturity (%) 0. 5

After all events have been recorded, After all events have been recorded, L...

After all events have been recorded, Lang's obligations to creditors represents what percent of total assets? a).record the events under an accounting equation b. After all e

Constructive trusts-trusts laws and accounts, CONSTRUCTIVE TRUSTS A con...

CONSTRUCTIVE TRUSTS A constructive trust is a trust imposed by equity regardless of the intention of the owner of the property: it arises by operation of law.  The concept has

Idiosyncratic risk of the stock, (a)   The market considers Intel Corp (INT...

(a)   The market considers Intel Corp (INTC) of all these stocks to be the riskiest since it has the highest beta of 1.497408. No, this measure of risk does not include the idiosyn

Winding up under supervision-liquidation of companies, Winding up under sup...

Winding up under supervision Virtually obsolete, in consequence of s.303 and the power to invoke the court's assistance under s.301. If a supervision order is made, the effect

Example of annuity, Assume Mr. Ram deposits Rs. 10,000 annually in a bank f...

Assume Mr. Ram deposits Rs. 10,000 annually in a bank for 5 years, at 10 percent compound interest rate. Compute the value of this series of deposits on the end of five years by as

Trustees duties in administering the d of a, Trustee's duties in administer...

Trustee's duties in administering the D of A 1) To carry out the trusts of the D of A and to distribute the property assigned to him in accordance with the provisions of the D of

Bottomline Consulting, I am in a class that is supposed to be 100 level and...

I am in a class that is supposed to be 100 level and I am really struggling. I need hlep with trial balances, adjustments, etc.

System x is judged to have high risk, Allied Managed Care Company is evalua...

Allied Managed Care Company is evaluating two different computer systems for handling provider claims. There are no incremental revenues attached to the projects, so the decision

State accounting, discuss the importance of state accounting to an effectiv...

discuss the importance of state accounting to an effective fiscal administration

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd