You work for a leveraged buyout firm and are evaluating a potential buyout of UnderWater Company.? UnderWater's stock price is $15 and it has 1.75 million shares outstanding.You believe that if you buy the company and replace its?management, its value will increase by 36%. You are planning on doing a leveraged buyout of UnderWater and will offer $18.75 per share for control of the company.
a. Assuming you get 50% ?control, what will happen to the price of? non-tendered shares?
b. Given the answer in part ?(a?), will shareholders tender their? shares, not tender their? shares, or be? indifferent?
c. What will your gain from the transaction? be?