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Acquirer (Firm A) wants to acquire Target (Firm T) in a merger. You put together the following information. As a reminder, after the merger, only
Acquirer (Firm A) wants to acquire Target (Firm T) in a merger. You put together the following information. As a reminder, after the merger, only shares of A will exist. i.e., after the merger, shares of T will no longer exist. 210 Assume that A agrees to pay 210 for T. Part A: What is the pre-merger (i.e., before the merger) share price of A? Part B: Perform a DATA TABLE of the pre-merger share price of A (i.e., your answer of part A1) as a function of shares outstanding of A. In your DATA TABLE, use the following values of shares outstanding: {3,6,9,12,15,18,21}. Part C: Plot the DATA TABLE from above (from Part A2). Place the plot somewhere in the yellow box below. Part D: What is the pre-merger share price of T ? Part E : What is the most that A should pay for T. i.e.. what is the value of T to A ? Part F : What is the synergy of this deal? Part G : What is the premium that A has agreed to pay to T ? Part H : The shareholders of which firm receive the net present value (NPV) of the deal: A or T ? Part I: What is the NPV of this deal? Part J: If stock is used as consideration. how many total shares of A must be offered for the 20 se per share would T's shareholders receive
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