Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 0
Sorry -- replied without reading too closely.

I am with the party line on this one. You use the market value of the debt and equity just like one ought to mark up the enterprising capital to market.

The rationale as I believe already stated is that you use the market value because that is what you would have if you sold the equity to a third party in an arm's length transaction. (There are control issues that might demand a premium over a minority passive stake but that's getting beyond the point.)

Also if Wrigley was going to raise capital today in a secondary offering the price received would be near current levels -- considering dilution etc after the offering is placed. So if it wanted to raise capital via a stock offering it would receive ~$60 times the amount of shares sold minus the friction of the transaction.

Hope that didn't make things worse :)

Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.