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Linder Corp. is investigating the possible acquisition of Allen, Inc. The following data are available: EPS Number of Shares Stock Price Lindner (A) $12.50 20,000,000
Linder Corp. is investigating the possible acquisition of Allen, Inc. The following data are available: EPS Number of Shares Stock Price Lindner (A) $12.50 20,000,000 $4.00 Allen (B) $18.00 3,000,000 $6.50 Linder plans to offer $5.80 cash and 2.25 shares of its own stock for each share of Allen. a. Assume no synergy. What are the gains (losses) to each group of shareholders? (7 pts) b. What synergy should the merged firm produce for the shareholders of Linder to break even? (3 pts)
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