Harolds PLC has a market value of 400 million and 30 million shares outstanding. Selfishes Department Store
Question:
Harolds PLC has a market value of £400 million and 30 million shares outstanding. Selfishes Department Store has a market value of £160 million and 18 million shares outstanding. Harolds is contemplating acquiring Selfishes. Harolds’ CFO concludes that the combined firm with synergy will be worth £590 million, and Selfishes can be acquired at a premium of £15 million.
a. If Harolds offers 12 million shares of its stock in exchange for the 18 million shares of Selfridges, what will the stock price of Harolds be after the acquisition?
b. What exchange ratio between the two stocks would make the value of the stock offer equivalent to a cash offer of £175 million?
StocksStocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...
Step by Step Answer:
a The number of shares after the acquisition will be the current number of shares outstanding for th...View the full answer
Corporate Finance
ISBN: 978-0071339575
7th Canadian Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Gordon Ro
