Question
Company B has agreed to be acquired by Company A with an exchange of 7000 shares of Company A. Company B has 15,000 shares with
Company B has agreed to be acquired by Company A with an exchange of 7000 shares of Company A. Company B has 15,000 shares with a price of 11 per share. Company A holds 60,000 shares at a price of 25 per share. The market is expected to create a synergy worth 30,000. a) What is the value of the company resulting from the merger? b) How many shares will the company have as a result of the merger? c) What is Company B's actual acquisition cost for Company A? d) How many shares would Company B have to acquire if Company A wanted to acquire it at a cost of 168,000?
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