plc, a quoted chemical manufacturing company, has until recently achieved a steady increase in profitability

C plc, a quoted chemical manufacturing company, has until recently achieved a steady increase in profitability over a number of years. It faces stern competition and the directors are concerned about the disquiet expressed by major shareholders regarding performance over the last two years. During this period it has consistently increased dividends, but its share price has not grown at the same rate as it did previously. K plc, a direct competitor, is similarly experiencing a reduction in profitability. Its shareholders are diverse, with the majority being financial institutions. K plc has been criticised for under-investment and has achieved no product development over the last two years. Following a concerted media campaign, K plc is facing prosecution for discharging untreated pollutants into a river. C plc is seriously considering making a bid to acquire K plc. The directors of C plc, however, are divided as to whether K plc should be closed down or permitted to continue production post-acquisition if a bid is made. In either situation, significant staff redundancies would follow.

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