Question 2: In August 2008, Apburn Inc. entered into an agreement to purchase al

Question

Question 2: In August 2008, Apburn Inc. entered into an agreement to purchase all of the outstanding shares of Ballard Corp. for $80 per share. Immediately prior to the Apburn Inc.’s bid, the shares of Ballard Corp. traded at $40 per share. The number of outstanding shares at the time of the announcement was 82 million. The book value of interest-bearing liabilities on the balance sheet of Ballard Corp. was $1.30 billion. a. Estimate the cost of this acquisition to the shareholders of Apburn Inc. (2 points) b. What value did Apburn Inc. place on the control of Ballard Corp.? (2 points)

Explanation / Answer

Question a. Bid price $                        80.00 No of Shares            82,000,000.00 Cost of Acquisition $ 6,560,000,000.00 Question b. Bid price $                        80.00 Market price $                        40.00 Cost of Control per share $                        40.00 Total Cost control $ 3,280,000,000.00

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