An electric utility company is in a stock-for-stock negotiation with an acquirer. The buyer's and target's share

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An electric utility company is in a stock-for-stock negotiation with an acquirer. The buyer's and target's share prices are currently trading at $35 and $20, respectively. The buyer is projected to earn $200 million, and the target, $150 million. The buyer cash holding balance is $250 million. Each party has 80 million shares outstanding. Suppose that the buyer and the target both estimate that combining the two firms will generate synergies and control benefits worth around $600 million on top of their current market valuation. What is the range of feasible exchange ratios (buyer's and seller's reservation exchange ratios) for this deal? Show your calculation steps.

Posted Date: Dec 03, 2021 12:02 AM

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An electric utility company is in a stock-for-stock negotiation with an acquirer. The buyer's and target's share

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Stepbystep explanation Target Electric Utility Company Buyer Acquirer Earnings of target 150 million Earnings of buyer 200 million Market valuation of ... View the full answer

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