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Consider the following premerger information about a bidding firm Firm B and a target firm Firm T Assume that both firms have no debt outstanding

Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. .........................................Firm B ....................Firm T Shares outstanding ....................8,300...................... 3,400 Price per share ...........................$46........................ $21 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $12,600. a. If Firm T is willing to be acquired for $24 per share in cash, what is the NPV of the merger? b. What will the price per share of the merged firm be assuming the conditions in (a)? c. In part (a), what is the merger premium? d. Suppose Firm T is agreeable to a merger by an exchange of stock. If B offers one of its shares for every two of T s shares, what will the price per share of the merged firm be? e. What is the NPV of the merger assuming the conditions in (d)?

Apr 01 2020 View more View Less

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