Monmouth Inc Case

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Monmouth Short Answer Questions 3. Simmons is eager to sell it position to Monmouth for $50 per share due to the following reasons: The unsatisfied prospect from possible merger between Robertson and NDP. Given the fact that Simmons is holding 177,000 shares of Robertson stock, it would be receiving NDP’s common stock after the merger. Simmons regards NDP stock as lackluster performer and anticipates that it may not show any significant growth in the near future. Moreover, since NDP stock is traded in small volume, Simmons is afraid it would not be easy to sell a large holding of NDP stock if disappointing performance occurred. The attractive merger of Robertson and Monmouth. If a Monmouth-Robertson merger is accepted, Simmons would be able to convert its 177,000 shares into Monmouth’s common stock. Although Monmouth is experiencing a cyclical downturn, Simmons believes that Monmouth’s earnings would rebound significantly and price would appreciate as well due to the opposite and complementary market distribution of sales between Monmouth and Robertson. In this case, Simmons would benefits if this merger takes place. The required return from shares. Simmons paid $42 per share originally to proceed the tender offer for Robertson. Besides, stock of Robertson is currently closed at $44. In order to maintain a certain return from the shares, Simmons has to charge a proper price of $50. If Simmons sold its position to Monmouth, Robertson’s cost of goods sold and other expense could be reduced. However, the other groups of Robertson shareholders still have an alternative merger if the concern of continuity of Robertson management and operating independence is taken into account. There may be a trade-off between management independence and potential profits. If the management is in favor of operating independence more, it would support

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