Question
5. Company A considers acquiring company B. Shares of the company A trade at $30 and there are 5,000 of A shares outstanding. Company B
5. Company A considers acquiring company B. Shares of the company A trade at $30 and there are 5,000 of A shares outstanding. Company B has 200 shares outstanding worth $100 each. If A acquires B, then the resulting synergy will amount to $10,000.
a) Suppose A offers to exchange every Bs share for four shares in the merged company. What will be the share price of the merged company?
b) What will be the total benefit for the existing shareholders of A?
c) What about the existing shareholders of B?
d) Suppose A offers to exchange every Bs share for $130 in cash. What will be the share price of the merged company?
e) What will be the total benefit for the existing shareholders of A?
f) What about the existing shareholders of B?
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Financial Statements
Authors: Inc. BarCharts
1st Edition
1423223837, 978-1423223832
