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Harrods PLC has a market value of 139 million and 5 million shares outstanding. Selfridge Department Store has a market value of 41 million and
Harrods PLC has a market value of 139 million and 5 million shares outstanding. Selfridge Department Store has a market value of 41 million and 2 million shares outstanding. Harrods is contemplating acquiring Selfridge. Harrods' CFO concludes that the combined firm with synergy will be worth 195 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 51 million? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 1616.) a. New stock price b. Exchange ratio
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