--%>

Did you see Vueling case

Did you notice the Vueling case? How is this possible that an investment bank sets the objective price of its shares in €2.50 per share upon the 2nd of October, 2007, just after replacing Vueling shares at €31 per share in June, 2007?

E

Expert

Verified

It is factual. After placing the shares of Vueling at €30 per share in December, 2006 and at €31 per share in June, 2007 and the 2nd of October, 2007 and the investment bank set the objective price at €2.5 per share.

1st December, 2006. IPO of Vueling at €30 per share. The first day, closing price was €32.99 per share.

23 February, 2007. Maximum at €46.7 per share.

6th June, 2007. Placement of the 20.97 percent of the share capital of Vueling (shares of Apax) at €31 per share.

19th July, 2007. One of the placement banks recommends the selling at the objective price at €20 per share.

August 2007. Vueling admits not being able to fulfil the business plan: that the shares fall in 30%.

31st August, 2007. New objective price of Vueling: €12 per share.

3rd October, 2007. The same placement bank values Vueling at €2.5 per share. Quotation: €8 per share.

23rd October, 2007. The bank increases the value of a share from €2.5 at €13, and this even recommends to 'selling.'

28th December, 2007. The last quotation of year 2007 is the value of share from €8.95 per share.

   Related Questions in Corporate Finance

  • Q : Is cash flow is a flow of cash to

    The often known as "cash flow" that is net income plus depreciation, is a flow of cash, but is this a flow to the company or to the shareholders?

  • Q : Calculate the risk-free rate You have

    You have been given the following information on two corporations; you are to assume that thesecurities are correctly priced. My Corp, Inc. has a Beta of 1.25 and an Expected Return of .145;Your Corp, Inc. has a Beta of .75 and an Expected Return of .095. Based on the

  • Q : Does the equity of shareholders have

    Does the equity of shareholders represents the savings a company has accumulated by the years?

  • Q : Financial problem regarding acquistion

    My Company paid an extremely higher price for the acquisition of other company; the price was recommended through the valuation of an investment bank. Now we have financial problems. So is there any way to make this bank legally responsible for such situation?

  • Q : What is Stock Market Stock Market : To

    Stock Market: To trade company shares (or stock) and derivatives, a stock market or equity market is public entity where these shares and derivatives are sold at agreed price. These are to be listed on a stock exchange in order to trade publicly.

  • Q : Is book value the excellent proxy to

    Is book value the excellent proxy to the value of the shares?

  • Q : Attributes of debt securities What are

    What are the Attributes of debt securities?

  • Q : Zurich Pvt Ltd. You have joined Zurich

    You have joined Zurich Pvt. Ltd as a Finance manager. You are given the following information: Zurich Pvt Ltd. is a diversified manufacturing firm dealing with electrical appliances. In 2012, the firm reported an operating income of Rs. 857.60 million and faced a tax rate of 35% on income. The firm

  • Q : Define Credit and Collections Credit &

    Credit & Collections: Usually, credit is stated as the procedure of providing a loan, in which one party transfers wealth to the other with the expectation that it will be re-paid in full plus interest. The definition of collections is connected t

  • Q : Problem on Yield to maturity Shawna

    Shawna desires to invest her recent bonus in a 4-year bond which pays a coupon of 11 % semi-annually. The bonds are selling at $962.13 nowadays. When she buys such bond and holds it to the maturity, what would be her yield? (Round to the nearest answer.) (i) 11.5%&nbs