Consider the following pre-merger 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 8,700 3,600 Price per Share $47 $19 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $16,700. Suppose Firm B agrees to a merger by an exchange of stock. If B offers one of its shares for every 2 of T's shares.
What is the NPV of the Merger?
$414.29
$4,814
$9,500
$480.58
Given,
Firm B | Firm T | |
Shares outstanding | 8700 | 3600 |
Price per share | $47 | $19 |
Synergy benefits = $16700
Solution :-
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