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In the fall of 2009, Kraft Foods attempted to buy Cadbury plc. Data for each of the two companies are given in the table. Both
In the fall of 2009, Kraft Foods attempted to buy Cadbury plc. Data for each of the two companies are given in the table. Both companies are all equity financed. The CEO of Kraft Foods estimated that merger synergies had a present value of $5 billion. Kraft offered each Cadbury shareholder 0.5141 shares in Kraft. Use the data in the table to answer the questions below. Kraft Cadbury Value of Firm Shares Outstanding Stock Price $47B 1.65B $28.48 $13B 0.96B $13.54 Part A. How many shares will there be in the merged company? Shares Outstanding Post Merger = B. (Enter your number in billions and round your answer to four decimals.) Part B. What is the value of the merged firm? Value of merged firm = $ B. (Enter your number in billions of dollars and round your answer to two decimals.) Part C. What is the NPV of the offer to Kraft Shareholders? NPV to Kraft = $ B. (Enter your number in billions of dollars and round your answer to two decimals.) Part D. What is the stock price for Kraft after the merger? Kraft Stock Price = $ . (Round your answer to two decimals.)
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