Both of Firm A and Firm B are 100 equity firms. You estimate that the incremental value of the acquisition is RM100,000. Firm B has indicated that it will agree to a sale if the price is RM150,000, payable in cash or stock. Firm B is worth RM100 as a stand-alone, so this is the minimum value that we could assign to Firm B. Should Firm A acquire Firm B? Should it pay in cash or stock? Calculate the value of firm A after merger. 

 

	Firm A	Firm B
Price per share	RM2	RM1
Number of shares	50,000	100,0000

            

            (CLO3:PLO2:C3) (CLO3:PLO2:C3) 

 

1. Briefly explain TWO (2) reasons of mergers. 

 

            (CLO3:PLO2:C2) (CLO3:PLO2:C2) 

 

"Merger maybe profitable but are they good for the economy?" Explain your answer towards this statement. 

Answer rating: 100% (QA)

Merger Acquisition Analysis QUESTION 1 To determine whether Firm A should acquire Firm B and whether it should pay in cash or stock First compare the ... View the full answer