a.
To calculate: The stock price of firm H after acquisition.
Merger:
Merger occurs when the shareholders of two or more companies pool the resources of their company into one separate legal entity and as a result a new company comes into existence. Merger is basically the result of merge of two or more companies into one.
Synergy:
Synergy is a state in which two or more companies are combined perform better than the sum of their individual efforts in terms of productivity, revenue and so forth.
Purchase Accounting Method for Mergers:
In the purchase accounting method, the assets of the targeted company have to be recorded into the current market value in the books of acquiring company and
b.
To find: Exchange ratio.
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