Blue Jay Energy and Chemical Corporation
(9 pages of text)
Eagle Corp. has made a tender offer for a further 15% of the shares of Blue Jay Energy. The price is well below what some feel is the real value of the shares. The focus of the case is on strategies to close a potential value gap in the context of a hostile takeover bid. The primary alternatives are to rely on a poison pill, spin-off and a leveraged recapitalization. The case is ideal to illustrate the use of the financial markets (synthetic white knight) to negotiate a deal.
The objectives of this case are to: present reasons for and measurement of potential value gaps; formulate a strategy to realize the value to close the gap; understand restructuring strategies and ethics of a strategy.
Canada/USA, Large, 1988
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