Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Shares outstanding 5,800 Price per share Firm B Firm T 1,700 $ 55 $ 25 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $8,100. Firm T can be acquired for $27 per share in cash or by exchange of stock wherein B offers one of its share for every two of T's shares. Are the shareholders of Firm T better off with the cash offer or the stock offer? Cash offer is better Share offer is better At what exchange ratio of B shares to T shares would the shareholders in T be indifferent between the two offers? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616.) Exchange ratio

Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Shares outstanding 5,800 Price per share Firm B Firm T 1,700 $ 55 $ 25 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $8,100. Firm T can be acquired for $27 per share in cash or by exchange of stock wherein B offers one of its share for every two of T's shares. Are the shareholders of Firm T better off with the cash offer or the stock offer? Cash offer is better Share offer is better At what exchange ratio of B shares to T shares would the shareholders in T be indifferent between the two offers? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616.) Exchange ratio

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter23: Corporate Restructuring

Section: Chapter Questions

Problem 1P

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For Question 1, 2, and 3, use the following information: 1.) Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B Firm T Shares outstanding 6,500 1,500 Price per share $ 45 $ 15 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $10,600. If Firm T is willing to be acquired for $20 per share in cash, what is the NPV of the merger? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Please round to the nearest dollar and format as "X,XXX" 2.) Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B Firm T Shares outstanding 6,500 1,500 Price per share $ 45 $…
Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B Firm T Shares outstanding 6,400 1,600 Price per share $ 48 $ 19 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $8,900. a. If Firm T is willing to be acquired for $21 per share in cash, what is the NPV of the merger? b. What will the price per share of the merged firm be assuming the conditions in (a)? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. If Firm T is willing to be acquired for $21 per share in cash, what is the merger premium? d. Suppose Firm T is agreeable to a merger by an exchange of stock. If B offers one of its shares for every two of T's shares, what will the price per share of the merged firm be? (Do not round intermediate calculations and round your answer to 2…
Consider two companies. Rearden Metal has earnings per share of €2, 10 million sharesoutstanding and its current stock price is €20. Associated Steel, has earnings per share of €1,25,4 million shares outstanding, and a stock price of €15Rearden Metal is thinking of buying Associated Steel and will pay for Associated Steel by issuingnew shares. Rearden Metal expects no synergies from the acquisitiorAssume that Rearden Metal offers an exchange ratio such that, at current pre-announcementshare prices for both firms, the offer represents a 20% premium to buy Associated Steel. a) Compute the price per share of the Rearden Metal that should be observed immediatelyafter the acquisition public announcement. b) Compute the price per share of the Associated Steel that should be observed immediatelyafter the acquisition public announcement.
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Firm A is planning on merging with Firm B. Firm A will pay Firm B's stockholders the current value of their stock in shares of Firm A. Firm A currently has 1,800 shares of stock outstanding at a market price of $40 a share. Firm B has 1,200 shares outstanding at a price of $47 a share. What is the value per share of the merged firm?
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Maxi ltd is considering acquiring mini ltd. Selected financial data for the two companies are as follows: Max ltd Mini Ltd Annual sales sh. Million 750 90 Net income sh. Millions 60 7.5 Ordinary shares outstanding (millions) 15 3 Earnings per share (EPS) sh 4 2.5 Market price per share (sh) 44 20 Required: a) Calculate the maximum exchange ratios Maxi ltd should agree if it expects no dilution in the Earnings Per Share. b) How much premium would the shareholders of Mini Ltd
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