Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Harrods PLC has a market value of 129 million and 5 million shares outstanding. Selfridge Department Store has a market value of 39 million and

image text in transcribed
Harrods PLC has a market value of 129 million and 5 million shares outstanding. Selfridge Department Store has a market value of 39 million and 2 million shares outstanding. Harrods is contemplating acquiring Selfridge. Harrods's CFO concludes that the combined firm with synergy will be worth 183 million, and Selfridge can be acquired at a premium of 10 million. a. If Harrods offers 1.2 million shares, of its stock in exchange for the 2 million shares of Selfridge, what will the stock price of Harrods be after the acquisition? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What exchange ratio between the two stocks would make the value of a stock offer equivalent to a cash offer of 49 million? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) a. New stock price b. Exchange ratio to 1

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Finance questions