Business, 19.03.2021 18:20 jocelyn7575

The management of Mitchell Labs decided to go private in 2002 by buying all 3.30 million of its outstanding shares at $17.50 per share. By 2006, management had restructured the company by selling off the petroleum research division for $13.50 million, the fiber technology division for $9.25 million, and the synthetic products division for $23 million. Because these divisions had been only marginally profitable, Mitchell Labs is a stronger company after the restructuring. Mitchell is now able to concentrate exclusively on contract research and will generate earnings per share of $1.40 this year. Investment bankers have contacted the firm and indicated that if it reentered the public market, the 3.30 million shares it purchased to go private could now be reissued to the public at a P/E ratio of 12 times earnings per share. Required:
a. What was the initial cost to Mitchell Labs to go private?
b. What is the total value to the company from (1) the proceeds of the divisions that were sold, as well as (2) the current value of the 3.30 million shares (based on current earnings and an anticipated P/E of 12)?
c. What is the percentage return to the management of Mitchell Labs from the restructuring?

Answers: 3

Show answers

Another question on Business

Business, 21.06.2019 17:10

Teller co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during may. each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. manufacturing overhead is applied at a rate of 110% of direct labor costs. teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory. what is the total amount to be budgeted for manufacturing overhead for the month?

Answers: 1

Answer

Business, 21.06.2019 19:00

Minolta inc. is considering a project that has the following cash flow and wacc data. what is the project's mirr? note that a project's projected mirr can be less than the wacc (and even negative), in which case it will be rejected. wacc: 10.00% year 0 1 2 3 4 cash flows -$850 300 $320 $340 $360

Answers: 3

Answer

Business, 22.06.2019 09:40

Catherine de bourgh has one child, anne, who is 18 years old at the end of the year. anne lived at home for seven months during the year before leaving home to attend state university for the rest of the year. during the year, anne earned $6,000 while working part time. catherine provided 80 percent of anne's support and anne provided the rest. which of the following statements regarding whether anne is catherine's qualifying child for the current year is correct? a.anne is a qualifying child of catherine.b.anne is not a qualifying child of catherine because she fails the gross income test.c.anne is not a qualifying child of catherine because she fails the residence test.d.anne is not a qualifying child of catherine because she fails the support test.

Answers: 2

Answer

Business, 22.06.2019 10:30

Describe three scenarios in which you might utilize mathematics to investigate a crime scene, accident scene, or to make decisions involving police practice. be sure to explain how math is used in police as they work through each scenario.

Answers: 1

Answer

You know the right answer?

The management of Mitchell Labs decided to go private in 2002 by buying all 3.30 million of its outs...

Questions