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Daker Industries reports assets of £140 million and liabilities of £85 million. Daker decides to repurchase 5% of its 11 million outstanding shares through a tender offer at £5 per share when the market price is £4.75. If the tender offer is fully subscribed, the most likely effect on the book value of Daker’s shares will be to:

A have no effect on the book value of Daker shares.

The book value of Daker shares is (£140 million - £85 million) / 11 million = £5 per share. Repurchasing its shares at a price equal to book value will not change the book value of Daker shares.

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