Question
The costs of equity are 17% for Lindner and 15% for Allen. Lindner plans to offer $5.00 cash and 1.5 shares of its own stock
The costs of equity are 17% for Lindner and 15% for Allen. Lindner plans to offer $5.00 cash and 1.5 shares of its own stock for each share of
Allen
a. Assume no synergy. What are the gains (losses) to each group of shareholders?
b. What synergy should the merged firm produce for the shareholders of Lindner to break even?
Lindner Allen EPS $2.00 $3.20 Dividend per share 0 $1.60 Number of shares 8,000,000 3,000,000 Stock price $4.00 $8.00
Step by Step Solution
There are 3 Steps involved in it
Step: 1
a To calculate the gains losses to each group of shareholders we need to first determine the value o...
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Step: 2
Step: 3
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
