Question
. Merger NPV Harrods PLC has a market value of 310 million and 11 million shares outstanding. Selfridge Department Store has a market value of
. Merger NPV Harrods PLC has a market value of 310 million and 11 million shares outstanding. Selfridge Department Store has a market value of 121 million and 6 million shares outstanding. Harrods is contemplating acquiring Selfridge. Harrodss CFO concludes that the combined firm with synergy will be worth 475 million, and Selfridge can be acquired at a premium of 13 million.
a. If Harrods offers 8.5 million shares of its stock in exchange for the 6 million shares of Selfridge, what will the stock price of Harrods be after the acquisition?
b. What exchange ratio between the two stocks would make the value of the stock offer equivalent to a cash offer of 134 million?
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The Euro A Challenge And Opportunity For Financial Markets Routledge International Studies In Money And Banking
Authors: Michael Artis , Elizabeth Hennessy, Axel Weber
1st Edition
0415217105, 978-0415217101
