Question
Linder Corp. is investigating the possible acquisition of Allen, Inc. The following data are available: Lindner (A) Allen (B) EPS $ 12.50 $18.00 Number of
Linder Corp. is investigating the possible acquisition of Allen, Inc. The following data are available:
| Lindner (A) | Allen (B) | |
| EPS | $ 12.50 | $18.00 |
| Number of Shares | 20,000,000 | 3,000,000 |
| Stock price | $ 4.00 | $6.50 |
Linder plans to offer $5.80 cash and 2.25shares 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) (Kindly show your workings)
b. What synergy should the merged firm produce for the shareholders of Linder to break even?(3pts) (Kindly show your workings)
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Accounting Ethics Education Making Ethics Real
Authors: Alberto J. Costa, Margarida M. Pinheiro
1st Edition
1032019999, 9781032019994
