Question

Consider the following pre-merger information about a bidding firm (Firm B) and a target firm (Firm...

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

Homework Answers

Answer #1

Given,

Firm B Firm T
Shares outstanding 8700 3600
Price per share $47 $19

Synergy benefits = $16700

Solution :-

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