Explain takeovers obligation, Financial Management

Assignment Help:

Takeover, Inc. is a Delaware corporation whose only stated purpose is to acquire companies.  It has virtually no assets and no employees other than the original founders who contributed a total of $50,000.   The founders are well known in the investment community and were formerly affiliated with a very successful investment firm called the Carlyng "Make Money" Group.  Takeover registers and qualifies as a blank check company with the SEC and raises $310 million under a Section 5 IPO.  After commissions and underwriting fees, it is left with $300 million.  It trades at about $10/share, about $2 above the offering price.  The founders allocate $50 million to operation of Takeover, e.g., for salaries, office space, travel expenses, research, consultants, attorneys, etc, in their search for a takeover target.  Six months after completing the IPO, Takeover seeks to acquire Target LLC, a privately owned software company that makes "near field programs" used in Android, valued at about $250 million.  Seventeen months after the IPO, Takeover and Target reach an agreement for selling the company.

Answer the following questions based on SEC Rule 419, 17 CFR 230.419:

  1. After closing the IPO, explain Takeover's obligation with respect to the funds it raised from the IPO.
  2. Explain whether Takeover's use of $50 million for overhead, salaries, etc., is in accordance with Rule 419.  Are there any remedies?
  3. After reaching a purchase agreement with Target, explain Takeover's obligation to its shareholders under Rule 419.
  4. Assume that 3 million shares opt out of Takeover; explain Takeover's obligation to those shareholders.
  5. Will the transaction go forward to completion if the acquisition required:
    1. 100% cash.
    2. an exchange of cash and equity, i.e., the owners of Target get $150 million and 40% equity in Takeover.

Related Discussions:- Explain takeovers obligation

The us pension fund system, The US Pension Fund System The US corporate...

The US Pension Fund System The US corporate pension system has matured along with the country's demographic cycle. It consists of both defined benefit plans and defined contrib

Describe the functions of controller, Q. Describe the Functions of Controll...

Q. Describe the Functions of Controller? (1) Planning and budgeting: - It comprises capital expenditure planning, profit planning, budgeting, inventory control, sales forecasti

Export/import bank (eximbank), Export/Import Bank (Eximbank) Federal Im...

Export/Import Bank (Eximbank) Federal Import-Export Bank, whose mainly function originally was to compensate U.S. exporters for subsidies approved competitors by foreign govern

Explain how price serve as a signal to resource owners, How does price serv...

How does price serve as a signal to resource owners? While consumers decide that a good or service is much more appealing than before, demand rises.  This makes a shortage at the

Value of conversion benefits, Value of Conversion Benefits: Having seen...

Value of Conversion Benefits: Having seen the measure used to analyze the convertible bonds, let us now examine the merits and demerits of convertible bonds and why or why not

Cost of equity from new common stock, Weaver Chocolate Co. expects to gain ...

Weaver Chocolate Co. expects to gain $3.50 per share during the present year, its expected dividend payout ratio is 65%, its expected constant dividend growth rate is 6.0%, and its

Features of capital budgeting decisions, Q. Features of Capital Budgeting D...

Q. Features of Capital Budgeting Decisions? Features of Capital Budgeting Decisions:- Moneys are invested in long-term assets. Moneys are invested in present times i

How & why does working capital affect incremental cash flow, How and why do...

How and why does working capital affect the incremental cash flow estimation for a proposed large capital budgeting project?  Explain. Several large projects require additional

Financial assets, Financial assets: Financial assets/instruments repres...

Financial assets: Financial assets/instruments represent the financial obligations that arise when the borrower raises funds in the financial market. In exchange for the funds

What is the primary assumption behind experience approach, What is the prim...

What is the primary assumption behind the experience approach to forecasting? The experience act to forecasting is based on the assumption that things will happen a certain way

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