Parent, Inc. is contemplating a tender offer to acquire 80 percent of Subsidiary Corporation's common stock. Subsidiary's shares are currently quoted on the New York Stock Exchange at $85 per share. In order to have a reasonable chance of the tender offer attracting 80 percent of Subsidiary's stock, Parent believes it will have to offer at least $105 per share. If the tender offer is made and is successful, the purchase will be consummated on January 1, 2009.
There must be more to thye
..more to the question. You have not asked it yet.
Based on the information provided, Parent, Inc. is considering making a tender offer to acquire 80 percent of Subsidiary Corporation's common stock. To have a reasonable chance of attracting 80 percent of Subsidiary's stock, Parent believes it will need to offer at least $105 per share. The current market price for Subsidiary's shares on the New York Stock Exchange is $85 per share.
To determine the potential cost of the tender offer, we need to calculate the number of shares Parent would need to acquire. Since Parent wants to acquire 80 percent of Subsidiary's stock, we need to find 80 percent of the total number of shares outstanding.
To calculate the number of shares, we need the total number of shares outstanding. Unfortunately, that information is not provided in the given question. Once the total number of shares is known, we can calculate 80 percent of that number.
Once we have the number of shares, we can multiply it by the offer price of $105 per share to find the potential cost of the tender offer.
However, since the information required to arrive at the final cost is not provided in the question, we can't determine the exact cost of the tender offer.