The management of Mitchell Labs decided to go private in 2002 by buying in all 3 million of its outstanding shares at $19.50 per share. By 2006, management had restructured the company by selling off the petroleum research division for $13 million, the fiber technology division for $9.5 million, and the synthetic products division for $21 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 ans will generate earnings per share of $1.25 this year. Investment bankers have contacted the firm and indicated that if it reentered the public market, the 3 million shares it purchased to go private could now be reissued to the public at a P/E ratio of 16 times earnings per share. a. What was the initial cost of 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 million shares (based on current earnings and an anticipated P/E of 16)?c. What is the percentage return t the management of Mitchell Labs from the restructuring? Use answers from parts a and b to determine this value.
a. 1994SharesPrice per shareInitial Cost b. 3,000,00019.558,500,0001996 Petroleum Research DivFiber Technology DivSynthetic Product DivTotal Proceeds 13,000,0009,500,00021,000,000…
They have a magnificent team. These people are always kind and willing to listen to your concerns or issues. Better yet, your assignment is always ready before the time, they usually send you a draft to double-check before they finalize your paper.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more