FNCE 251 Lecture Notes - Lecture 15: Takeover, Discount Window, Shareholder Rights Plan
Document Summary
Li(cid:373)ited o(cid:449)(cid:374)ership stake of a(cid:374)(cid:455) o(cid:374)e o(cid:449)(cid:374)er to a (cid:373)a(cid:454)i(cid:373)u(cid:373) of 5%. You (cid:272)ould(cid:374)"t o(cid:449)(cid:374) (cid:373)ore tha(cid:374) 5%, (cid:449)hi(cid:272)h pre(cid:448)e(cid:374)ts a takeoever. Management is facing a situation where 5% debt limitation will expire. Management is underperforming and is vulnerable to a hostile takeover, which is why they negotiate this transaction with axa. This is a relatively small premium, which is what shareholders are opposed to: book value of equity: . Wh(cid:455) are(cid:374)"t other (cid:271)idders steppi(cid:374)g i(cid:374): there"s a termination/break-up fee. If other bidders bid successfully, they will have to pay this fee ( million = Accessing deal financing: cash/stocks, contingent payments, oran- debt security, convertible/deal. They wanted to pay equity, but this was not an option, so they used cash as the next best option for shareholders. This allowed them to do a cash payment (. 5 billion) You got 1 warrant/share you had 16 warrants and you could buy (cid:1005) oran per share at . 75. it (cid:449)as u(cid:374)derpri(cid:272)ed at (cid:1006)(cid:1006)%.
