FUND.OF CORP.FIN.(LL)-W/ACCESS >CUSTOM<
FUND.OF CORP.FIN.(LL)-W/ACCESS >CUSTOM<
11th Edition
ISBN: 9781259898549
Author: Ross
Publisher: MCG CUSTOM
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Chapter 26, Problem 2M
Summary Introduction

Case synopsis:

Company B has been planning over the past 6 months to merge with Company H. After few discussions, it has decided to make a cash offer of $250 million for Company H. Person B, the financial officer of Company B, has been involved in the negotiations of merger.

He has prepared a pro forma financial statements for Company H assuming that the merger will take place. If Company B purchases Company H, then there will be an immediate payment of dividend. Person B has identified the interest rate of borrowing for both the companies.

Characters in the case:

  • Company B
  • Company H
  • Person B

Adequate information:

  • Both the companies that are planning to merge have niche markets in the industry of golf club.

To calculate: The highest price per share that Company B must be willing to pay for Company H

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