Company A has no debt and 12 million shares outstanding trading for $6,00 each. Company A intends to acquire Company B, which has $15 million debt and 5 million shares outstanding trading for $11,20 each, issuing Company A new shares. Company B is facing financial problemas and didn't have profits for several years, so there is no possibility of using the tax bennefit relative do its debt. If Company A goes on with the acquisition, it will be possible to use the tax shield that is not being used. Company B shareholders will only accept the bid if their return is, at least, equal to Company A sharholders return.

a) What is the minimum offer that shareholders of company A will have to make to company B shareholders (number of shares of Company A in exchange for 1 Company B share) so that the acquisition occurs? (Hint, use solver or goal seek in excel)

b) What will be the return per share from this acquisition for shareholders from both companies (in %)? Assume that corporate taxes are 34%. (Hint, use solver or goal seek in excel)