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10. Assume that Dow Chemicals as the acquirer in question 9 agreed to pay 30% of the consideration in cash. a. What is the new
10. Assume that Dow Chemicals as the acquirer in question 9 agreed to pay 30% of the consideration in cash. a. What is the new exchange ratio for the cash-and stock deal? b. What are the values of the cash component and the stock component of the nominal price per share? c. How much is paid in cash to DuPont shareholders? d. What is the wealth transfer from Dow shareholders to DuPont shareholders? e. What is the Downside Protection for the Target shareholders? this is what I Did in previous question, this is part of the information missing
Merger Calculations | ||
(Amounts in Millions) | ||
DuPont Shareholders Ratio | 1.282 | |
Shares Outstanding | 533.00 | |
Shares Ratain by Dow | 745.00 | |
Dow Shares Closed on August 30th. | $64.90 | |
DuPont Shares Closed on August 30th. | $83.19 | |
A. Compute the percentage Ownership for shareholders of each company once the deal is closed. | ||
DowDuPont Shares | 683.31 | |
Total Shares DownDupont Shares | 1,428.31 | |
Dow Ownership Percentage | 52.16% | |
DuPont Ownership Percentage | 47.84% | |
B. What is the total number of shares in DowDuPont? | ||
Total Shares DownDupont | 1,428.31 | |
c. Assuming that DuPont shareholders are the target, what acquisition premium per share and in total did they receive from the deal? | ||
Premerger Share Price of Dupont | $83.19 | |
Post Merger Share Price of DownDuPont | $83.20 | |
Premium per Share | $0.0118 | |
Number of Shares Pre-Merger | 533.00 | |
Total Received from the Merger | $6.29 | |
D. Assuming zero synergy in the deal, what is the wealth transfer, if any, from Dow shareholders to DuPont Shareholders? | ||
Position Dow Shareholders | 52.16% | |
Value DowDuPont Company | $92,697.06 | |
Wealth After Merger Dow | $48,350.50 | |
Wealth Pre-Merger Dow | $48,350.50 | |
Difference in Wealth | $- | |
Therefore, is no weatlh transfer from Down to DuPont shareholders | ||
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