Question
Assume that you are comparing two different M&A deals, each with 100% stock considerations. In transaction A, the acquirers stock price is $50.00, the targets
Assume that you are comparing two different M&A deals, each with 100% stock considerations. In transaction A, the acquirers stock price is $50.00, the targets price is $75.00, and the offered premium on the targets price is 25%. In transaction B, the acquirers stock price is $5.00, the targets price is $10.00 and the offered premium on the targets price is 10%. Which of the following statements is true about the two exchange ratios?
| a. | Transaction A has a higher exchange ratio | |
| b. | Transaction B has a higher exchange ratio | |
| c. | The exchange ratios are the same in both transactions | |
| d. | There is not enough information given to calculate the exchange ratio |
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Fundamentals of Investments Valuation and Management
Authors: Bradford D. Jordan, Thomas W. Miller
5th edition
978-007728329, 9780073382357, 0077283295, 73382353, 978-0077283292
