Question
Sweet Cola Corp. (SCC) is bidding to take over Salty Dog Pretzels (SDP). SCC has 2,000...
Sweet Cola Corp. (SCC) is bidding to take over Salty Dog Pretzels (SDP). SCC has 2,000 shares outstanding, selling at $40 per share. SDP has 1,000 shares outstanding, selling at $16.50 a share. SCC estimates the economic gain from the merger to be $16,000.
a. If SDP can be acquired for $19 a share, what is
the NPV of the merger to SCC?
b. What will SCC sell for, per-share, when the
market learns that it plans to acquire SDP for $19 a share?
(Do not round intermediate calculations. Round your answer
to 2 decimal places.)
c. What will SDP sell for?
d. What are the percentage gains to the
shareholders of each firm? (Do not round intermediate
calculations. Enter your answers as a percent rounded to 2 decimal
places.)
Homework Answers
Answer #1
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