CIMA Financial Strategy F3 Question # 101 Topic 11 Discussion

CIMA Financial Strategy F3 Question # 101 Topic 11 Discussion

F3 Exam Topic 11 Question 101 Discussion:
Question #: 101
Topic #: 11

JAG and ZEB are two listed companies. JAG is approximately 20 times the size of ZEB.

10 days ago JAG made a hostile bid for ZEB. offering a share exchange.

The bid price represents a 10% profit to the shareholders of ZEB at today's market prices to reflect the high levels of synergistic benefits that JAG expects to realise from the transaction.

Which of the following is the greatest future threat to the post-transaction value for JAG?


A.

Forecast synergistic benefits are not realised.


B.

New shareholders acquired from ZEB demand a higher dividend payout than JAG is used to.


C.

Negative market response to the bid.


D.

New shareholders acquired from ZEB withdraw their investment by selling their shares within 12 months.


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