Loki, Inc. and Thor, Inc. have entered into a stock-swap merger agreement whereby Loki will pay a 39% premium over Thor's pre-merger price. If Thor's pre-merger price per share was $42 and Loki's was $51, what exchange ratio will Loki need to offer? a. 1.42 shares of Loki for each share of Thor b. 0.72 shares of Loki for each share of Thor c. 0.86 shares of Loki for each share of Thor d. 1.14 shares of Loki for each share of Thor
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Loki, Inc. and Thor, Inc. have entered into a stock-swap merger agreement whereby Loki will pay a 39% premium over Thor's pre-merger price. If Thor's pre-merger price per share was $42 and Loki's was $51, what exchange ratio will Loki need to offer?
a. 1.42 shares of Loki for each share of Thor
b. 0.72 shares of Loki for each share of Thor
c. 0.86 shares of Loki for each share of Thor
d. 1.14 shares of Loki for each share of Thor
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- A merger between Minnie Corporation and Mickey Corporation is under consideration. The financial information for these firms is as follows: Minnie Corporation Mickey Corporation Total earnings $1,682,000 $2,581,000 Number of shares of stock outstanding 290,000 890,000 EPS $5.80 $2.90 P/E ratio 10X 20X Market price per share $58 $58 a. On a share-for-share exchange basis, what will the postmerger EPS be? (Round the final answer to 2 decimal places.) Postmerger earnings per share $ b. If Mickey Corporation pays a 25 percent premium over the market value of Minnie Corporation, how many shares will be issued? (Do not round intermediate calculations.) Shares issued shares c. With the 25 percent premium, what will the postmerger EPS be? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Postmerger earnings per share $Consider the following premerger information about Firm X and Firm Y: Firm X Firm Y Total earnings $ 40,000 $ 15,000 Shares outstanding 20,000 20,000 Per-share values: Market $ 49 $ 18 Book $ 20 $ 7 Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $4 per share. Assuming that neither firm has any debt before or after the merger, what are the total assets of Firm X after the merger?A limited is considering making a tender offer for B Ltd. The merger would result in economies of scale (Benefit of synergy) of Rs.20 lakh. The relevant financial information for B Ltd. is as follows: Number of shares outstanding 1,80,000 Earnings per share Rs.12 Market price per share Rs.76 A Limited intends to make a two-tier tender offer wherein it will offer Rs.82 for the first 1, 00,000 shares and Rs.75 for the remaining shares. a. If the shareholders of B Ltd act together as a Group, will they benefit in terms of price being offered? If so & if not, give reasons.
- Consider the following premerger information about Firm X and Firm Y: Firm X Firm Y Total earnings $ 95,000 $ 22,000 Shares outstanding 52,000 17,000 Pre-share values: Market $ 52 $ 21 Book $ 15 $ 10 Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $6 per share, and that neither firm has any debt before or after the merger. a. Assuming the pooling of interests method is used, what is the equity of the combined firm? Equity value $ b. List the assets of the combined firm assuming the purchase accounting method is used. Assets from X $ Assets from Y Goodwill Total Assets XY $ Please dont provide solution image based thnxA limited is considering making a tender offer for B Ltd. The merger would result in economies of scale (Benefit of synergy) of Rs.20 lakh. The relevant financial information for B Ltd. is as follows: Number of shares outstanding 1,80,000 Earnings per share Rs.12 Market price per share Rs.76 A Limited intends to make a two-tier tender offer wherein it will offer Rs.82 for the first 1, 00,000 shares and Rs.75 for the remaining shares. a. If the tender is successful, how much should A Ltd pay to B Ltd.? b. If the Economies of merger is Rs.20, 00,000, How much of this goes to the Shareholders of A Ltd & B Ltd respectively? How much are the shareholders of A Ltd. And B Ltd. benefitting from the economies of merger?Finance Loki Inc. and Thor Inc. have entered into a stock swap merger agreement whereby Loki will pay a 35% premium over Thor’s pre-merger price. A. If Thor’s pre-merger price per share was $37 and Loki’s was $52, what exchange ratio will Loki need to offer? B. On the day of the merger announcement, the increase in Thor (the target firm’s) stock price will be ______(higher/lower) than 35% (the takeover premium). C. Based on your answer in part B of this question, explain why you think Thor’s stock price increase will be higher or lower than the takeover premium at the time of the merger announcement.
- 1.Firm A is planning on merging with the Firm B. Firm A will pay Firm B’s stockholders the current value the of their stock plus one-half on the synergy, which is $120, in shares of firm A. Firm A currently has 4000 shares of stock outstanding at a market price of $21 a share. Firm B has shares outstanding at a price of $10 a share. What is the value of the merged firms? A.$96240 B.$88120 C.$96000 D.$84120 E.$92360 2.Which of the following not true regarding financial statement A.Group financial statement be produced by each subsidiary as well as the parent entity B.Profit must be separated between members of the parent company and that of minority interest C.Minority interest share of equity represents that ‘part of a subsidiary’s equity not allocated to members of the parent company. D.Group financial statements must be produced by the parent entity only. E.None of the options provided.Denali Inc. is acquiring Whitney Corp. at an exchange ratio of 2:1. After the deal is announced, Denali’s stock price is $25 and Whitney’s stock price is $47. Create a trade that would take advantage of the merger arbitrage opportunity, starting with 100 shares of Whitney’s stock. Show in detail the profit from your portfolio if between today and the deal being completed, Denali’s stock price falls to $20.Papa Co. issued shares in exchange for all the outstanding shares of Baby Co. The business combination did not result to any goodwill. The share exchange ratio was 2:1. Baby Co. share capital has a carrying amount of P40,000. The par value per share is P4. Baby Co.’s net identifiable assets have a carrying amount of P400,000 and fair value of P800,000. Papa Co.’s shares have a par value of P10. How much is the acquisition date fair value per share of Papa Co.’s shares?* a. P 80 b. P 40 c. P 20 d. P 100
- M’s Club is attempting to acquire the V’s Club. Certain financial data on these corporations aresummarized in the following table.Item M’s Club V’s ClubEarnings available for common stock $20,000 $8,000Number of shares of common stock outstanding 20,000 4,000Market price per share $12 $24M’s Club has sufficient authorized but unissued shares to carry out the proposed merger.a. If the ratio of exchange is 1.8, what will be the earnings per share (EPS) based on the original sharesof each firm?b. Repeat part a if the ratio of exchange is 2.0.c. Repeat part a if the ratio of exchange is 2.2.d. Discuss the principle illustrated by your answers to parts a through cWorld Enterprises is determined to acquire Intous Ltd through exchanging stocks. World Enterprises is offering R65 per share for Intous ltd. You are given the following information World Enterprises Intous Ltd Net Income R50 R10 Shares outstanding 5000 2000 Earnings per share R10 R5 Market price per share R150 Price earnings ratio R15 a. Calculate the number of shares to be issued by Intous Ltd: b. Calculate combined earnings per share of both World Enterprise and Intous Ltd c. Calculate price earnings ratio (P/E ratio) paid (Hint: use the R65 to calculate the P/E ratio) d. Compare the current and paid P / E ratiosData for Henry Company and Mayer Services are given in the following table. Henry Company is considering merging with Mayer by swapping 1.25 shares of its stock for each share of Mayer stock. Henry Company expects its stock to sell at the same price/earnings (P/E) multiple after the merger as before merging. Item Henry Company Mayor Services Earnings Available for Common Stock $225,000 $50,000 Number of Shares of Common Stock Outstanding $90,000 $15,000 Market Price per Share $45 $50 Calculate the ratio of exchange in market price. Calculate the earnings per share (EPS) and price/earnings (P/E) ratio for each company.