Question
Willow Enterprises is considering the acquisition of Steadfast Corp. in a stock swap transaction. Currently, Willows stock is selling for $45 per share. Although Steadfasts
Willow Enterprises is considering the acquisition of Steadfast Corp. in a stock swap transaction. Currently, Willows stock is selling for $45 per share. Although Steadfasts shares are currently trading at $30 per share, the firms asking price is $60 per share.
a. If Willow accepts Steadfasts terms, what is the ratio of exchange?
b. If Steadfast has 15,000 shares outstanding, how many new shares must Willow issue to consummate the transaction?
c. If Willow has 110,000 shares outstanding before the acquisition, and earnings for the merged company are estimated to be $450,000, what is the EPS for the merged company?
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Finance With Monte Carlo
Authors: Ronald W. Shonkwiler
2013th Edition
146148510X, 978-1461485100
