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YQR has a market value of $125 million and 5 million shares outstanding. HKG has a market value of $40 million and 2 million shares
YQR has a market value of $125 million and 5 million shares outstanding. HKG has a market value of $40 million and 2 million shares outstanding. YQR thinks of taking over HKG with a premium of $10 million. The combined firm will be worth $185 million. If YQR offers 2 million shares of its stock in exchange for the 2 million shares of HKG, what will the stock price of YQR be after the acquisition? What exchange ratio between the two stocks would make the value of a stock offer equivalent to a cash offer of $50 million?
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