Lesley Plc recently announced that it was going to acquire Jim Ltd and would finance the acquisition
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Question:
Lesley Plc recently announced that it was going to acquire Jim Ltd and would finance the acquisition by means of a rights issue. Lesley Plc offered 2 new shares for each existing 8 shares held at 150p. The existing shares traded at 200p.
Calculate the ex-rights price, the value of a right of a new share, the value of a right of an old share and the amount a holder of £2000 worth of shares could receive if the rights were sold. Also show that wealth is unaffected if the right is taken up or sold.
Related Book For
Corporate Finance and Investment decisions and strategies
ISBN: 978-1292064062
8th edition
Authors: Richard Pike, Bill Neale, Philip Linsley
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