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Mega Service Corporation (MSC) is offering to exchange 2.5 shares of its own stock for each share of target firm Norman Corporation stock as consideration
Mega Service Corporation (MSC) is offering to exchange 2.5 shares of its own stock for each share of target firm Norman Corporation stock as consideration for a proposed merger. There are 10 million Norman Corp shares outstanding, and its stock price was $60 before the merger offer. MSCs pre-offer stock price was $30. What is the control premium percentage offered? Now suppose that, when the merger is consummated eight months later, MSCs stock drops to $25. At that point, what is the control premium percentage and total transaction value?
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