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ABC Inc and XYZ Inc are competing companies in the Namibia mobile telecommunication industry. The...

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Finance

ABC Inc and XYZ Inc are competing companies in the Namibia mobile telecommunication industry. The two companies have market shares of ABC 30% and XYZ 50%. ABC Inc is 10 years old and XYZ is 50 years old in the industry. XYZ enjoyed monopoly for 40 years until ABC Inc entered the industry. ABC Incs market share has grown from 1% to 10% in the last three years because of its innovativeness and creativity. XYZ feels threatened. You are the finance manager of ABC Inc. Your company intelligence sources have warned that XYZ hatched a hostile take-over strategy and will be using its chequebook to clandestinely buy ABC Inc stock on the open secondary market to seize control of ABC Inc on basis of majority shareholding.

Discuss the financial strategy you would recommend to the strategic management of ABC Inc.

20 marks) b. Giving examples, discuss what hedging strategies are. Your discussion should cover any types of hedging, a description of each of the types, purposes, situations where applicable, and how each hedge hedges against specific risks.

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