Cima F3 Exam Question No 3

Question No 3:

Company A is a large listed company, with a wide range of both institutional and private shareholders.

It is planning a takeover offer for Company B.

Company A has relatively low cash reserves and its gearing ratio of 40% is higher than most similar companies in its industry.

Which TWO of the following would be the most feasible ways of Company A structuring an offer for Company B?

A. Cash offer, funded by borrowings.
B. Share for share exchange.
C. Cash offer, funded from existing cash resources.
D. Cash offer, funded by a rights issue.
E. Debt for share exchange.

Answer: B, D