Question

1. Determine the amount Jackson Enterprises is willing to pay in terms of goodwill.
2. If JE’s shares are currently trading at $62.43, 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–Hirschman Index for the industry both before and after the pro-posed merger.
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:
The market value of MSI’s fixed assets is $60,000,000.
The sales (in millions) for the industry by company are:
Sales
ABC ......... $89
CWC ......... 66
DEF ........... 35
JE ........... 45
KOJ ........... 42
MSI ........... 18
SEE ........... 76


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  • CreatedMarch 26, 2015
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