Calculate the new share price of big corp after acquisition

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Problem 1: Big Corp is planning to fully acquire Small Corp. Big Corp currently has 10 million shares outstanding with a share price of $50 and total outstanding debt of $100 million (no excess cash). Small Corp currently has 5 million shares outstanding with a share price of $30 and total outstanding debt of $50 million (no excess cash). Big Corp plans to conduct a blended offer. Specifically, it plans to offer $25 in cash and for 0.2 new shares in Big Corp for each share in Small Corp. Big Corp will assume all outstanding debt of Small Corp and will finance the cash part of the offer by taking out a new bank loan. Synergies from the transaction are expected to be $120 million. Calculate the new share price of Big Corp after the acquisition.

Reference no: EM132791650

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