Sore Ltd is a Fast Moving Consumer Goods company, focusing on drinks and tidbits. The revenue center for Sore Ltd is their chocolate drinks business unit. Because of their exponential revenue growth from chocolate drinks, Bengi Ltd aims to take-over the Sore Ltd. Unfortunately, their pre-bid has been rejected twice. Sore Ltd makes a decision on the right issue, with the hope that can get enough funds for a counter-attack. However, many analysts think it is a blunder move.
The question: “Explain briefly why doing the right issue by Sore Ltd is a blunder move in tackling the hostile takeover from Bengi Ltd?”

Note:
Right Issue: "a corporate action by issuing more shares and selling it in the market"

Answer rating: 100% (QA)

Sore Ltds Blunder Move Issuing new shares also known as doing the right issue is a common way for co... View the full answer