Explain the issues involved in setting the bid price.
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Explain the issues involved in setting the bid price. |
Answer and Explanation
Verified Answer
The issue while setting the bid price is calculating synergistic gains over the current price of the stock of the target company. This is because if the acquiring company pays more...
Verified Answer
The issue while setting the bid price is calculating synergistic gains over the current price of the stock of the target company. This is because if the acquiring company pays more than the sum of synergetic gains and the current value of the stock, then the value of the acquiring company is diluted. Moreover, the target company needs a minimum of the current value of its stock. So the bid price has to set accordingly.
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