Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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?

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_2

Step: 3

blur-text-image_3

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

Financial Accounting For Management

Authors: Paresh Shah

2nd Edition

0198077033, 978-0198077039

More Books

Students also viewed these Accounting questions

Question

In words, what is put-call parity?

Answered: 1 week ago

Question

1. Discuss the main incentives for individual employees.pg 87

Answered: 1 week ago