Chiki Ltd is a poultry company producing chickens and its eggs. The management of Chiki looks forward to strengthen their supply chain by acquiring a chicken feed company like Soya Ltd. The issue is that Soya Ltd does not want to sell their company due to their financial position. In fact, Soya ltd has cash-in-hand as many as Rm 1billion.
As the offered being rejected, Chiki attempted to do hostile takeover through stock markets. The market capitalization of Chiki in stock market is Rm 5billion, whereas Soya Ltd is only Rm 3 billion.

A.    If the Chiki Ltd knows that the CFO aims to be the chairperson and also the CEO of Soya Ltd, How Chiki should do to handle the rejection?

B.    If the management of Soya Ltd has agency problem and aims the big incentives from the takeover, how the management of Soya Ltd should handle the hostile takeover?

C.    If Chiki Ltd offers Rm 4.5 per share to Soya Ltd, which currently has current market price of Rm 3, Why Soya Ltd management reject the offers?

D.    If the management accepts the offer, explain shortly what are the next procedure the management should do?

E.     Explain shortly how Employee Stock Option Plan can be used for Pac-Man strategy.

Answer rating: 100% (QA)

A If the CFO of Soya Ltd aims to become the chairperson and CEO of the company Chiki Ltd may try to ... View the full answer