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other potential buyers in order to make the deal close faster. And, in retrospect, since no other
bidders emerged, the $60 strategy may have been a sound approach to the acquisition. d. External events (such as technological change) can cloud the future for companies and, since stock
prices are driven by valuing a company’s future, affect the stock valuation. When events beyond the
control of management change the prospects for a business, the market will react by pricing in those
expected changes. If the internet will drive advertisers away from traditional newspapers, the future
cash flow of those newspapers will drop; the market reacts by simply pricing the stock today in
anticipation of those lowered expectations. ID12–9
a. “Net” proceeds mean the actual cash received by the company after commissions to underwriters and
expenses are paid. “Gross” proceeds would equal all the cash paid by investors buying the offered
shares. b. Dividing the proceeds by the number of shares issued indicates that the stock price has been climbing
rapidly. The proceeds per share issued climbed from $68.29 to $287.72 and then leveled off at $268.05 for
the three years shown. c. Google has been one of the...
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