Holooly Plus Logo
Holooly Plus Logo

Question 7.3: Celibes plc made a tender offer of shares and the following ...

Celibes plc made a tender offer of shares and the following offers were received by investors:

Share price Number of shares tendered
at this particular price		 Cumulative number
of shares tendered
000s 000s
£2.80 300 300
£2.40 590 890
£1.90 780 1,670
£1.20 830 2,500

The directors of Celibes plc wish to issue 2,000,000 shares, at a minimum price of £1.20.

The blue check mark means that this solution has been answered and checked by an expert. This guarantees that the final answer is accurate.
Learn more on how we answer questions.

The striking price would have to be £1.20 as, above this price, there would be insufficient interest to issue 2,000,000 shares. At the price of £1.20, the total number of shares tendered exceeds the number of shares available and so a partial allotment would be made. Normally, each investor would receive 4 shares for every 5 shares tendered (that is 2,000/2,500).

Related Answered Questions

Question: 7.Act.15

Assume that: (a) Ippo Ltd (see Example 7.4) provides additional ordinary share capital at the beginning of the investment period of £60 million, thereby eliminating the need for Andante Ltd to take on a bank loan (b) any cash flows generated by Andante Ltd would be received by Ippo Ltd in the form ...

Verified Answer:

The IRR can be calculated using the trial and erro...
Question: 7.Act.9

An investor with 2,000 shares in Shaw Holdings plc (see Example 7.1) has contacted you for investment advice. She is undecided whether to take up the rights issue, sell the rights or allow the rights offer to lapse. Calculate the effect on the net wealth of the investor of each of the options being ...

Verified Answer:

Before the rights issue, the position of the inves...
Question: 7.S-AQ.1

Ceres plc is a large conglomerate which, following a recent strategic review, has decided to sell its agricultural foodstuffs division. The managers of this operating division believe that it could be run as a separate business and are considering a management buyout. The division has made an ...

Verified Answer:

Ceres plc (a) (i) Preliminary calculations Annual ...
Question: 7.RQ.4

What kind of attributes should the owners and managers of a business possess to attract private equity finance? ...

Verified Answer:

A business should have owners who are: committed ...
Question: 7.RQ.3

Distinguish between an offer for sale and a public issue of shares. ...

Verified Answer:

An offer for sale involves an issuing house buying...
Question: 7.RQ.1

UK private-equity firms have been criticised for the low level of funding invested in business start-ups by comparison with the levels invested by their US counterparts. Can you think of possible reasons why such a difference may exist? ...

Verified Answer:

Various reasons have been put forward to explain t...
Question: 7.RQ.2

Why might a listed business revert to being an unlisted business? ...

Verified Answer:

A listed business may wish to revert to unlisted s...
Question: 7.Act.11

Assume that the market price per share in Wickham plc (see Example 7.2) before the bonus issue was £2.10. What will be the market price per share following the share issue? ...

Verified Answer:

The business has made a one-for-two issue. A holde...
Question: 7.Act.2

How can the Stock Exchange help entrepreneurs to do this? ...

Verified Answer:

By floating their businesses on the Stock Exchange...
Question: 7.Act.1

Could the fact that investors are able to transfer shares with ease also be of benefit to listed businesses? ...

Verified Answer:

Investors are more likely to invest if they know t...