Valuation of a Private Target
Response to the following problem:
Rastell, Inc., a U.S.-based MNC, is considering the acquisition of a Russian target to produce personal computers (PCs) and market them throughout Russia, where demand for PCs has increased substantially in recent years. Assume that the stock prices of most Russian companies rose substantially just prior to Rastell's assessment of the target. If Rastell, Inc., acquires a private target in Russia, will it be able to avoid the impact of the high stock prices on business valuations in Russia?