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Firm A seeks to acquire ( previously owned) firm T whose ultimate dollar value is uncertain because of its possible liability for the past production of hazardous waste. The table shows A's and T's respective value (in $ millions) for the firm conditional on whether the firm is found to be liable. None that A and T have different contingent values and different probability assessments ( shown in parentheses) as to T's liability. Both firms are risk neutral. Value of Firm T T Not Liable T Liable A's Value 50 (.5) 20 (.5) T's Value 40 (.8) 30 (.2) A. Firm A is hoping to acquire T in 100 percent cash transaction. Is a mutually beneficial 100 percent cash transaction possible? Explain. B. Instead, suppose that firm A considers acquiring T, paying all or in part with its own stock. (the owner of T are prohibited from selling the stock they receive for two years.) If A acquires T and subsequently T is found liable, both sides expect that A's Stock price will fall by 50 percent. Is a mutually beneficial 100 percent stock transaction possible? (provide an example to show whether the answer is yes or no.) C. The firms are considering a provision in the acquisition allowing T's senior managers ( who will continue to work for the combined firm) to buy back (at a predetermined price) ownership of T in the event that the firm is found liable. Does such a provision make sense? Provide a qualitative explanation
Type your question here ON THE BASIS OF TRENDS IN BANK BRANCHES, DOES THE PUBLIC APPEAR TO HAVE MORE OR LESS ACCESS TO BANKING FACILITIES (BRANCHES AND OFFICES) IN THE LAST 20 YEARS?
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