What is the merger premium expressed
Course:- Business Economics
Reference No.:- EM132281364

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Business Economics

Firm X and Firm Y are both 100% equity-financed. Firm X wants to acquire Firm Y for $165,000 in the form of either cash or stock. The synergy value of the deal is $25,000. You are given the following additional information:


Numbers of shares 20,000 9,750

Price per share $37.50 $15.00

a. What is the merger premium expressed as a percent of Firm Y's stock price? What is the NPV of the acquisition if cash is used?

b. What is the price per share of the post-merger firm following a cash acquisition?

c. What is the price per share of the post-merger firm if payment is made in stock?

d. What is the NPV of acquiring Firm Y when stock financing is used?

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Business Economics) Materials
Suppose that a Starbuck’s venti latte currently sells for US$4.00 in the United States and C$5.00 in Canada. Make up a value for the exchange rate between the U.S. dollar and
a bear that weighs 4000n gasps a vertical and slides down at constant velocity. Illustrate what is the friction force that acts on the bear.
In the early 1970s, the six largest manufacturers of ready-to-eat breakfast cereals shared 95 percent of the market. Over the proceeding 20 years, these manufacturers introduc
Explain why is the index of industrial production an appropriate coincident indicator. Why is the average prime rate charged by banks an appropriate lagging indicator.
On October 1, Golshan paid $250,000 for a residential rental property. This purchase price represents $200,000 for the building and $50,000 for the land. Five years later, on
Suppose that real domestic output in an economy is 300 units, the quantity of inputs is 50 and the unit price of the input is $9. The level of productivity and the per-unit co
Let D equal the domestic demand for oil, Sd equal the domestic supply and Si equal imported supply of oil for gasoline. Assume the world supply is infinitely elastic and the d
Opponents of free trade often argue that trade with other countries destroys domestic jobs; it threatens industries that are vital to national security; it inhibits the chance