Question 2 Goo company has a market value of $310 million and 11 million shares outstanding. Gle company has a market value of $121 million and 6 million shares outstanding. Goo is contemplating acquiring Gle. Goos CFO concludes that the combined firm with synergy will be worth $487.5 million, and Gle can be acquired at a premium of $13 million.

a. If Goo offers 8.5 million shares of its stock in exchange for the 6 million shares of Gle, what will the stock price of Goo 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 $107.25 million?