Doubts

Ch. 7 - Exercise 2 (In-class slides)

Re: Ch. 7 - Exercise 2 (In-class slides)

by Julio Crego -
Number of replies: 0
Dear Pietro,

Note that the shares of A provide the right to collect all cash flows of AB after the acquisition; hence, shareholders of A give up cash flows of AB to buy B. In return, they receive B.

Yes, we always use AB in a stock offer.