Question
Companies A and B are valued as follows: Both companies are 100% equity financed. Company A now acquires B by offering two (new) shares of
Companies A and B are valued as follows:
Both companies are 100% equity financed. Company A now acquires B by offering two (new) shares of A for every three shares of Company B. Suppose that the merger really does increase the value of the combined firms by $18,000. What is the net gain to target shareholders?
| A. | $4,000 | |
| B. | $0 | |
| C. | $17,000 | |
| D. | $1,000 | |
| E. | None of the above |
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Finance And Financial Markets
Authors: Keith Pilbeam
2nd Edition
1403948356, 978-1403948359
