Problem
Suppose Juniper Industries has three investors with the ownership structure shown in the table below. Juniper Industries is going to issue shares to raise capital and provide a "liquidity event" for Investor A to sell shares. In total Juniper Industries is going to sell 50,000 shares to new investors, with 75% of those shares being issued by the company and 25% from Investor A. Suppose the issuance price is $65 and at the end of the first day of trading the stock price is $82.
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Number of Shares
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Investor A
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100,000
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Investor B
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100,000
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Investor C
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50,000
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Total Shares
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250,000
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a) What is the total number of shares outstanding after the issuance?
b) What fraction of the company did Investors A, B, and C own prior to the issuance?
c) What fraction of the company do Investors A, B, and C own after the issuance?