Answered step by step
Verified Expert Solution
Link Copied!

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

image text in transcribed

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 $50 million (no excess cash). Big Corp plans a stock swap and will offer to exchange each share of Small Corp for 0.6 new shares in Big Corp. Big Corp will assume all outstanding debt of Small Corp. Synergies from the transaction are expected to be $80 million. Calculate the new share price of Big Corp after the acquisition (PBig + Small). Round your result to two decimals (do not include the $-symbol in your answer)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Entrepreneur's Growth Startup Handbook 7 Secrets To Venture Funding And Successful Growth

Authors: David N. Feldman

1st Edition

1118445651, 978-1118445655

More Books

Students also viewed these Finance questions