Mayo Corporation is currently trading at $30 per share. There are 10 million shares outstanding, and the company has no debt. You believe that the value of the company would increase by 50% if the management were replaced. How much would you need to offer in total to acquire 50% of Mayo's shares?

Question

Quizplus · Accepted Answer

B) The total value of the firm = ($30 × $10 million shares = $300 million.
To buy 50%, offer = $300 million × 50% = $150 million.

Mayo Corporation Is Currently Trading at $30 Per Share