AFM 371 Lecture Notes - Issued Shares, Weighted Arithmetic Mean, N170

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM 371
• Professor: Neil Brisley

Document Summary

Class 23, tuesday, final class, wrap-up q"s, review, exam discussion, q&a, course evaluations. Extended office hour, q&a, probably in amphi, e. g. , weds 4 april, 1pm-4pm. What are the advantages/disadvantages of a cash bid versus a stock bid. Risk & uncertainty, return, leverage, taxation, information effects, management incentives, ownership & control. It is less risky for the bidding company (i don"t know who firm a is) It is less risky for the issuing company: paying out in shares shows has less consequences paying cash is risky. Good reasons: create synergy, create cost savings, increase market share, these are all part of creating value. 3: even if the merger is going to create value, be careful that you don"t over pay for that value, use the other company"s skills that you need. Firm b ( bidder") is contemplating a takeover of firm t ( target") by issuing new shares of b in exchange for all the shares of t.