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Unformatted text preview: Assume the following: (i) Eskimo pays out $11 million in the form of a special dividend immediately before the offering using internal cash on hand. (iii) All of the shares of Eskimo are sold to the public. The proceeds of the IPO are distributed to the current (pre-IPO) owners of Eskimo. Estimate the market value of equity of Eskimo after the IPO. Using this estimate, what do you recommend as the asking price for the shares in the IPO? Question #2: If you were Reynolds management, would you sell Eskimo to Nestle or accept the proposed IPO plan. What criteria would you use in your decision?...
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- Spring '11