FNCE30002 Lecture Notes - Lecture 9: Centralisation, Predeal, Control Premium
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D e f i n i t i o n s (cid:3003) (cid:3003) The present value of the bidding firm"s cash flows in the absence of acquisition. The present value of the target firm"s cash flows in the absence of acquisition. The present value of the merged firms" cash flows following the acquisition. Note: vb and vt are the pv of the firms operating independently. E x a m p l e (cid:1841)(cid:1845)(cid:1846)(cid:3030)(cid:3028)(cid:3046) =(cid:1842)(cid:1870)(cid:1855)(cid:1857) (cid:1840)(cid:1873)(cid:1865)(cid:1854)(cid:1857)(cid:1870) (cid:1867)(cid:1858) (cid:1846)(cid:1853)(cid:1870)(cid:1859)(cid:1857)(cid:1872) (cid:1845) (cid:1853)(cid:1870)(cid:1857)(cid:1871) Represents the proportion of the combined company owned by target shareholders (cid:1840)=(cid:3003) (cid:4666)(cid:3003)+(cid:4667) (cid:1841)(cid:1845)(cid:1846)(cid:3046) (cid:3028)(cid:3045)(cid:3032)= (cid:3003) (cid:1840)(cid:1842)(cid:3003)=(cid:1840) (cid:1840)(cid:1846) (cid:1841)(cid:1845)(cid:1846) (cid:1840)(cid:1846) (cid:1841)(cid:1845)(cid:1846)(cid:3030)(cid:3028)(cid:3046) =(cid:1841)(cid:1845)(cid:1846)(cid:3030)(cid:3028)(cid:3046) (cid:1840)(cid:1846) (cid:1841)(cid:1845)(cid:1846)(cid:3046) (cid:3028)(cid:3045)(cid:3032)=(cid:1841)(cid:1845)(cid:1846)(cid:3046) (cid:3028)(cid:3045)(cid:3032) . In 5 years-time a ny firm cbk is a hit and management decides to expand to chicago: potential target company bau to takeover provides information (table, synergistic benefits from cost efficiencies have a present value of ,000. Assume willing to make a cash offer of per share to bau shareholders.
