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Suppose Hybrid shareholders will agree to a merger price of $3125 per share Should Birdie proceed with the merger 2 What is the highest price per share that Birdie should be willing to pay for

Suppose Hybrid shareholders will agree to a merger price of $31.25 per share. Should Birdie proceed with the merger? 2. What is the highest price per share that Birdie should be willing to pay for Hybrid? 3. Suppose Birdie is unwilling to pay cash for the merger but will consider a stock exchange. What exchange ratio would make the merger terms equivalent to the original merger price of $31.25 per share? 4. What is the highest exchange ratio Birdie should be willing to pay and still undertake the merger? Birdie Golf, Inc., has been in merger talks with Hybrid Golf Company for the past six months. After several rounds of negotiations, the offer under discussion is a cash offer of $250 million for Hybrid Golf. Both companies have niche markets in the golf club industry, and both believe that a merger will result in synergies due to economies of scale in manufacturing and marketing, as well as significant savings in general and administrative expenses. Bryce Bichon, the financial officer for Birdie, has been instrumental in the merger negotiations. Bryce has prepared the following pro forma financial statements for Hybrid Golf assuming the merger takes place. The financial statements include all synergistic benefits from the merger. If Birdie Golf buys Hybrid Golf, an immediate dividend of $67.5 million would be paid from Hybrid Golf to Birdie. Stock in Birdie Golf currently sells for $87 per share, and the company has 18 million shares of stock outstanding. Hybri

 

May 15 2020 View more View Less

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