Simon Manufacturing Co

question 11

Essay

Simon Manufacturing Co.is planning to acquire Garfunkel Engineering in a cash plus stock buyout.Garfunkel has 2,000,000 shares of common stock currently outstanding,and the market price is currently at $25 per share.The buyout would offer to purchase Garfunkel Engineering common stock for $19.50 per share,plus a newly issued share of Simon Manufacturing convertible preferred stock,valued at $13.75 per share.
Simon Manufacturing's investment dealer has suggested,as an alternative,a single-stage buyout at $32.50 per share for all of Garfunkel's common stock.
A)What is the total cost of the cash plus stock buyout?
B)What is the total cost of the cash only proposal?
C)If it wants to minimize the total cost of the acquisition,what should Simon Manufacturing do?

• A)What is the total cost of the cash plus stock buyout?
• B)What is the total cost of the cash only proposal?
• C)If it wants to minimize the total cost of the acquisition,what should Simon Manufacturing do?

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Definitions:

Two-factor Theory

A psychological theory suggesting that emotional experiences arise from a combination of a physiological response and a cognitive interpretation of that response.

Physiological Arousal

The body's physical response to stimuli, involving increased heart rate, respiration, and energy mobilization.

Cannon-Bard

A theory of emotion that proposes that physiological arousal and emotional experience occur simultaneously and independently.

James-Lange

a theory of emotion proposing that emotions result from our interpretations of bodily reactions to stimuli.