XYZ Inc., and Thor, Inc. have entered into a stock swap merger agreement whereby XYZ will pay a 20% premium over Thor's premerger price. The total synergy of the merger is estimated to be $3m. The table below contains necessary information to perform an NPV analysis for the merger.
|pre-merger share price||$20||$10|
|number of shares||2m||0.5m|
(a) Calculate the number of shares XYZ will issue to exchange the shares of Thor.
(b) If XYZ instead proposes a cash offer. Calculate the offer price that will split the synergy equally between the two companies.
Get Answers For Free
Most questions answered within 1 hours.