Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PLZ PLZ HELP a) Dialog Corp (DC) provides technical services to the upstream, midstream, and downstream sectors in the oil, gas, and petrochemical industry. The

PLZ PLZ HELP

image text in transcribed

image text in transcribed

a) Dialog Corp (DC) provides technical services to the upstream, midstream, and downstream sectors in the oil, gas, and petrochemical industry. The current market price of DC stock is $6.50 per share and it has a total of 152 million shares outstanding. The company is looking to expand the current scope of operations due to the recent economic recovery from Covid-19 pandemic. One possibility suggested by the Board of Directors is to carry out a horizontal acquisition. The Chief Financial Officer (CFO) of DC has found a potential company, Serba Dynamic (SD) and estimated the potential synergy from acquisition where the information is displayed in the tables below. Private information from DC management will become public within one year after any potential merger is completed. Company Current Share Price Shares Outstanding (millions) Serba Dynamic (SD) $5 35 Potential Synergy from merger according to: Consensus Analyst Private Information of DC View Management (public info) Company Serba Dynamic (SD) $70 millions $30 millions If DC offers 100 million shares of its stock for SD, If DC offers 100 million shares of its stock for SD, i) Calculate the post-merger price per share of the merged firm before the private information is revealed. (3 marks) ii) Calculate the post-merger price per share of the merged firm after the private information is revealed. (3 marks) iii) Based on private information, determine whether DC should make the stock offer to SD using the NPV criterion

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

How To Read A Financial Report Wringing Vital Signs Out Of The Numbers

Authors: John A. Tracy , Tage C. Tracy

9th Edition

1119606462,1119606489

More Books

Students also viewed these Finance questions