Usg

. How should Day respond to Desert Partners tender supply? Day has to think in terms of maximizing stockholder value. Day should reject the allow and here is why ? USG has been a takeover tar cast down in the past driven by its steady cash flow, low operating costs, strong food market share and thought to be undervalued by many analysts. any(prenominal) take over is assertable for the right price ? if at all rejecting the takeover bid will strengthen USGs talks strategy and encourage the tendering company to increase their price. The bid was considered to be unsolicited, coercive and inadequate. Desert Partners has indicated a willingness to increase their tender offer to $50.00 per share in cash, debt, and stock. This change is not official and we tonus that this makes their true intentions uncertain. If Desert Partners is going to increase their offer to $50.00 with ample certainty, then the takeover plan may be more than advantageous than the recapitalization plan from the USG shareholders perspective. USG has to seriously consider the viable extract of implementing the proposed recapitalization. USGs board of directors proposed a leveraged recapitalization that would pay a cash dividend of $37 per share, $5 per share in the form of a payment-in-kind debenture and derriere stock.

Day should weigh the value to shareholders under both plans and resolve which one will give the trump out shareholder benefit. Is the proposed recapitalization the best response? There are two answers to this question. USGs board debated a number of alternatives. They considered repurchasing additional stock, selling equity to a sociable third party or selling the entire company to a friendly acquirer. In fact, U.K. based BPB industries was a possible ?White Knight. However, analysts have also drawn heed to the fact that the proposed recapitalization would burden the company with debt, forcing it to sell profitable production line units. USG will go from a company that is virtually... If you want to get a full essay, order it on our website: Orderessay

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