Question

The NFF Corporation has announced plans to acquire LE Corporation. NFF is trading for $44 per​...

The NFF Corporation has announced plans to acquire LE Corporation. NFF is trading for $44 per​ share, and LE is trading for $50 per​ share, implying a​ pre-merger value of LE of approximately $5.3 billion. If the projected synergies are $1.29 ​billion, what is the maximum exchange ratio NFF could offer in a stock swap and still generate a positive NPV​?

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Answer #1

The maximum exchange ratio NFF could offer in a stock swap and still generate a positive NPV = 1.413 of share of NFF for each share of LE.

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