Question
BM PLC has a market value of $680 million and 40 million shares outstanding. BDS has a market value of $250 million and 25 million
BM PLC has a market value of $680 million and 40 million shares outstanding. BDS has a market value of $250 million and 25 million shares outstanding. BM is contemplating acquiring BDS. BM's CFO concludes that the combined firm with synergy will be worth $1000 million and BDS can be acquired at a premium of $20 million.
a. If BM offers 15 million shares of its stock in exchange for the 25 million shares of BDS, what will the stock price of BM be after the acquisition?
b.What exchange ratio between the two stocks would make the value of the stock offer equivalent to a cash offer of $270 million?
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
Accounting Principles Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak
8th Canadian Edition
111950242X, 1-119-50242-5, 978-1119502425
