F3 Exam Dumps | Company AD is planning to acquire Company DC. It is evaluating two methods of structuring the terms of

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Question 175/185

Company AD is planning to acquire Company DC. It is evaluating two methods of structuring the terms of the bid, which will be ether a debt-funded cash offer or a share exchange
The following Information is relevant
* The two companies are of similar size and in related industries
* AB's gearing ratio measured as debt to debt plus equity, is currently 30% based on market values. This Is the company's optimum capital structure set to reflect the risk appetite of shareholders.
* The combined company is expected to generate savings and synergies
Which THREE of the following are advantages to AB's shareholders of a debt-funded cash offer compared with a share exchange?

A. WACC will increase f credit worthless falls too low, further increasing the returns to shareholders.

B. Shareholder control will remain with AB's current shareholders

C. EPS Mil Increase

D. More of the synergistic benefits of the acquisition will accrue to AB's current shareholders.

E. Gearing will increase.

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Question 175/185

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