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Redwater is considering acquiring Bluewater. Redwater has 10 million shares outstanding, with a share price of $20 and earnings per share of $2. Bluewater has
Redwater is considering acquiring Bluewater. Redwater has 10 million shares outstanding, with a share price of $20 and earnings per share of $2. Bluewater has 4 million shares outstanding, with a share price of $15 and earnings per share of $1.25. The acquirer will pay $17 cash for each of the targets shares. Redwater expects this transaction to bring synergies worth $40 million. Immediately after the announcement of this transaction, the price per share of Redwater will be closest to:
a.$21.60.
b.$17.20.
c.$15.90.
d.$23.10.
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