ABC has $1\mathrm{.}00$ million shares$$ outstanding, each of which has a price of $ $17.$ It has made a takeover offer of XYZ$$ Corporation, which has $1\mathrm{.}00$ million shares$$ outstanding, and a price per share of $ $2\mathrm{.}57.$ Assume that the takeover will occur with certainty and all market participants know this.$$ Furthermore, there are no synergies to merging the two firms.

a$.$ Assume ABC made a cash offer to purchase XYZ for $ $3\mathrm{.}36$ million. What happens to the price of ABC and XYZ on the$$ announcement? What premium over the current market price does this offer$$ represent?

b$.$ Assume ABC makes a stock offer with an exchange ratio of $0\mathrm{.}14.$ What happens to the price of ABC and XYZ this$$ time? What premium over the current market price does this offer$$ represent?

c$.$ At current market$$ prices, both offers are offers to purchase XYZ for $ $3\mathrm{.}36$ million. Does that mean that your answers to parts $($a$)$ and $($b$)$ must be$$ identical? Explain.

Question content area bottom

Part $1$

a$.$ After ABC makes a cash offer to purchase XYZ for $ $3\mathrm{.}36$million$,$ the price of XYZ is $$$

$$

$3\mathrm{.}36$ per share. $($Round to the nearest$$ cent.$)$

Part $2$

This represents a premium of

$$

$30\mathrm{.}74\%.($Round to one decimal$$ place.$)$

Part $3$

The price of ABC is $$$

$$

$16\mathrm{.}21$ per share. $($Round to the nearest$$ cent.$)$

Part $4$

b$.$ After ABC makes a stock offer with an exchange ratio of $0\mathrm{.}14,$ the price of ABC is $$$

$$

enter your response here per share.$($Round to the nearest$$ cent.$).$ Please answer $($b$)$ and $($c$)$