In the case of Conrail, the poison pill provision gave each shareholder the right to purchase one
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Question:
respectively. Please use numerical analysis (you can use tables) to explain the mechanism of poison pill.
(a) What is the total equity market value and the number of share outstanding after the pill is triggered?
(b) What will the share price be?
(c) How will the ownership of Conrail be shared between Friendly Shareholder and Hostile Bidder?
(d) And finally, what is the value that is transferred from hostile to friendly shareholders because of the poison pill?
Related Book For
Foundations Of Financial Management
ISBN: 9781259265921
11th Canadian Edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
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