Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Firm C has a market value of $600 million and 30 million shares outstanding. Firm D has a market value of $200 million and 20
Firm C has a market value of $600 million and 30 million shares outstanding. Firm D has a market value of $200 million and 20 million shares outstanding. Now firm D is contemplating acquiring firm C. Firm Ds financial controller concludes that the combined firm with synergy will be worth $1 billion and firm C could be acquired at a premium of $100 million. To make the value of stock offer equivalent to cash offer of $700 million to firm C, what would be the proper exchange ratio of the stocks of the two firms?
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