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FIN - Jackson Enterprises (JE)

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Question;Jackson Enterprises (JE) is offering a 25% takeover premium to Michael Studios, Inc (MSI) for the firm?s 2 million outstanding shares, which are currently trading for a pre-offer price of 20 per share.The balance sheet for MSI is:Assets LiabilitiesCurrent $15,000,000 Current $7,500,000Fixed $45,000,000 Long-Term $25,000,000Total $60,000,000 Total $32,500,000Owners equity $27,500,000Total liabilities and equity $60,000,000The market value of MSI?s fixed assets is $60,000,000.The sales (in millions) for the industry by company are:SalesABC $89CWC $66DEF $35JE $45KOJ $42MSI $18SEE $761. Determine the amount Jackson Enterprises is willing to pay in terms of goodwill.2. If JE?s shares are currently trading at $62.43m then how many shares should JE offer for every share of MSI?3. Assuming that MSI will be treated as a separate reporting subsidiary following the merger, develop the balance sheet for the subsidiary?4. Calculate the Herfindahl Index for the industry both before and after the proposed merger

 

Paper#47954 | Written in 18-Jul-2015

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