LAT Ltd has a market value of $600 million and 45 million shares outstanding. TDN Ltd has a market value of $200 million and 15 million shares outstanding. YZ is contemplating to acquire MF Ltd. CFO of YZ concludes that the combined firm values will be $900 million and MF Ltd can be acquired for $252 million.

(a)If YZ offers 15 million shares of its stock for in exchange for the 15 million shares of MF, what will the share price of YZ be after the acquisition? (3 marks)

(b)What exchange ratio between the two companies would make the value of stock offer equivalent to a cash offer of $252 million. (9 marks)