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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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
15th edition
77861612, 1259194078, 978-0077861612, 978-1259194078
