Weatherhead Bakery in considering acquiring Donuts Express. Their current stock price, number of shares outstanding and balance sheets are below:

Donuts Express

Assets $7 million	Debt $2 million
	Equity $5 million (200,000 shares at $25 each)

Weatherhead Bakery(Pre-deal)

Assets $60 million	Debt $10 million
	Equity $50 million (1M shares at $50 each)

Weatherhead Bakery -closing price: $50 & Shares Outstanding 1,000,000

Donuts Express- closing price: $25 & Shares outstanding: 200,000

Suppose that Weatherhead Bakery will announce the acquisition tomorrow, but is still unsure on how to finance the deal. Analyze the scenario below:

An all-stock deal for a target price of $30. Calculate the following

1. What is the premium offered for the stock?
2. Discuss why this premium may be different from the premium in the all-cash deal?
3. How much will it cost Weatherhead Bakery to buy all outstanding shares of Donut Express?
4. What is the exchange ratio?
5. If you were a Donuts Express shareholder and owned 25 shares, how many shares of Weatherhead Bakery will you receive?
6. Calculate Weatherhead Bakerys leverage ratio after acquiring Donuts Express. Keep in mind that only new equity was issued to finance this deal.
7. How many shares will Weatherhead Bakery have to issue in order to finance this deal?
8. Donuts Express shareholders will now own shares of Weatherhead Bakery. What percentage of ownership will Donuts Express shareholders have over Weatherhead Bakery?