Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Big Corp is planning to fully acquire Small Corp. Big Corp currently has 10 million shares outstanding with a share price of $50 and total
Big Corp is planning to fully acquire Small Corp. Big Corp currently has 10 million shares outstanding with a share price of $50 and total outstanding debt of $100 million (no excess cash). Small Corp currently has 5 million shares outstanding with a share price of $30 and total outstanding debt of S50 million (no excess cash). Big Corp plans an all cash offer and will offer 538 per share of Small Corp. The transaction will be financed with a new bank loan and Big Corp will assume all outstanding debt of Small Corp. Synergies from the transaction are expected to be 580 million. Calculate the new share price of Big Corp after the acquisition (PBig + Smal). Round your result to two decimals (do not include the S-symbol in your answer)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started