Question
Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding.
Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B Firm T Shares outstanding 1,500 700 Price per share $32 $26 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $3,500. If Firm T is willing to be acquired for $30 per share in cash, what is the NPV of the merger? If Firm T is willing to be acquired for $30 per share in cash, what will the price per share of the merged firm be? If Firm T is willing to be acquired for $30 per share in cash, what is the merger premium? Suppose Firm T is agreeable to a merger by an exchange of stock. If B offers one of its shares for every 4 of T's shares, what will the price per share of the merged firm be? Suppose Firm T is agreeable to a merger by an exchange of stock. If B offers one of its shares for every 4 of T's shares, what is the NPV of the merger?
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