Assets $23.6 million	Debt $5 million
	Equity $18.6 million

Assets $8.5 million	Debt $4.5 million
	Equity $4 million

Alpha Tech (pre-deal) Beta Corp

Alpha Tech closing price: $155 Beta Corp closing price: $100 Shares outstanding: 120,000 Shares outstanding: 40,000

After several years, Beta made some bad investments and continued to raise debt to finance its operations. Alpha, on the other hand, hired a strong management team and successfully launched several new products. As a result, today the balance sheet of both companies looks very different

Alpha wants to increase its market share, so it is considering acquiring Beta. Supposed that Alpha Tech plans to announce its acquisition plans next week. The CFO has the weekend to figure out how to finance the acquisition and present the proposal to the board of directors of both companies. Analyze the three scenarios below:

An all-stock deal for a target price of $120. Calculate the following:

1. How much will it cost to finance this deal? (2 pts)
2. What is the exchange ratio? (2 pts)
3. If you were a Beta Corp shareholder and owned 30 shares, how many shares of Alpha will you receive? (2 pts)
4. Calculate Alphas leverage ratio after acquiring Beta. Keep in mind that only new equity was issued to finance this deal. (2 pts)
5. How many shares will Alpha have to issue in order to finance this deal? (2 pts)
6. Beta will now own shares of Alpha. What percentage of ownership will Beta have over Alpha? (2 pts)