Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The answer is C, wanna know how to get the answer. Thank you Company A is planning to acquire Company B. After the acquisition there

image text in transcribed

The answer is C, wanna know how to get the answer. Thank you

Company A is planning to acquire Company B. After the acquisition there will be an estimated increase in joint earnings for a present value of $20 million. At the moment (before the acquisition) company A's shares trade for $178 and there are 200,000 shares outstanding. Company B's shares trade for 212 each and there are 300,000 shares outstanding. The boards of directors of the two companies agree that 70% of the increase in earnings will go to Company B's shareholders and the rest to Company A's shareholders. The acquisition will be paid with shares of Company A, and A is planning to issue 400,000 new shares. How many shares of company A will B's shareholders receive after the acquisition? A. 0.64 shares of A for each share of B. B. 0.76 shares of A for each share of B. C. 1.30 share of A for each share of B D. 1.52 shares of A for each share of B. E. I choose not to

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

Finance Applications And Theory

Authors: Marcia Cornett, Troy Adair, John Nofsinger

6th Edition

1264101589, 9781264101580

More Books

Students also viewed these Finance questions

Question

Describe the concept of corporate social responsibility.

Answered: 1 week ago

Question

Explore the concept of business ethics.

Answered: 1 week ago

Question

Discuss human resource management issues for small businesses.

Answered: 1 week ago