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

Compare and contrast mutual and stockholder-owned savings, Compare and cont...

Compare and contrast mutual and stockholder-owned savings and loan associations. Some loan and savings associations are owned by stockholders, just as commercial banks and oth

Define burden of a tax is shared by producers and consumers, The burden of ...

The burden of a tax is shared by producers and consumers.  Under what conditions will consumers pay most of the tax?  Under what conditions will producers pay most of it?  What det

Explain interest rate risk, Explain Interest rate risk Interest rate r...

Explain Interest rate risk Interest rate risk considers to interest rates changing not favorably before the swap dealer can lay off with an opposing counterparty the unplaced

Balance sheet, Balance Sheet: The balance sheet measures the financial ...

Balance Sheet: The balance sheet measures the financial position of the business at a particular point in time.  It is also called Statement of Financial Position. The balan

Opposite project - net present value, A company has the opportunity to sell...

A company has the opportunity to sell an old machine. The machine is fully depreciated to a zero book value but could be sold for $5,000. If the company did not sell the machine, i

Calculate the break-even point, A Video Rental store has two employees. The...

A Video Rental store has two employees. The Supervisor is paid $2,200 per month. The other employee, Mark is paid $1,200 per month. In addition, Mark is paid a commission of 20 cen

Savings, This is the part of after-tax personal income that is not spent.

This is the part of after-tax personal income that is not spent.

Define factors for investing in the emerging stock market, As an investor, ...

As an investor, what factors would you consider before investing in the emerging stock market of a developing country? Answer:  An investor in emerging market stocks requirements

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