Suppose that the acquirer has $8$ billion shares outstanding, and the target has $6$ billion shares outstanding. Assume that the acquirer is paying a $25\%$ premium for the target $(30$ billion for the equity$)$ and that the acquirer stock price will stay at $10$ dollars a share. What should be the exchange ratio for this merger in a stock deal?

Answer:

This is the formula. The price for the deal is target share price$*(1+$premium$),$

then, deal price $=$ Acquirer stock price $*$ Exchange ratio, solve for exchange ratio