Berkshire Hathaway and 3G Buy American Food Icon Heinz (Research Paper Sample)

Institution
Name
Unit code
Unit name
Lecturer
Date
1. Evaluate the impact of a range of offer prices for the target firm, including what constitutes the “maximum price”
Impact associated with a range of offer prices affects the financing structure and the stakeholder involvement in the company’s operation. High prices are meant to keep stakeholders away and average prices act as a form of attraction. Berkshire and 3G have been in a position of injecting more than $18.24 billion to acquire the common shares of Merger Sub J.P and Well Fargo. They aim to rising their prices to ensure that they can settle their debts so that the companies can remain afloat. Shareholder value is maximized whereby they are allowed to inject resources into the operation of the company (Stowell & Kawar, 2014). Thermo Fisher was able to acquire all of Life Tech's common shares for $76 per share. The pricing was impacted by the debt that Life Tech was facing of 2.2 billion dollars. The maximum price was impacted by the equity, cash, and outstanding debt. Therefore, these become the main factors that can be used in determining the maximum price for a firm (Slattery & Zidar, 2020). A result of Thermo Fisher increasing its prices on the shares from $0.70 to $1.00 had an impact on earning of transaction-related expenses and expenses incurred in integrating two parties involved.
2. Determine which financing structures are consistent with maintaining or achieving a desired credit rating
As a result of the merger between the two companies, capital structure is used in maintaining an investment-grade credit rating. It was the duty of Thermo Fisher’s senior management could have gone ahead to test various capital structures between the 2 extremes of all-equity and all-debt before reaching an agreement on which form of payment should be used by clients and the one that they find to be comfortable with. The deal getting done was the form of payment and the deals were instrumental (Achleitner, 2018). Limiting the amount of borrowing helps in improving the effort to retain an investment-grade rated. Therefore, this means that the average interest coverage ratio is 4.0.46