Big Corp is planning to fully acquire Small Corp. Big Corp currently has 10 million shares outstanding with a share price of $50 and total outstanding debt of $100 million (no excess cash). Small Corp currently has 5 million shares outstanding with a share price of $30 and total outstanding debt of $50 million (no excess cash). Big Corp plans an all cash offer and will offer $38 per share of Small Corp. The transaction will be financed with a new bank loan and Big Corp will assume all outstanding debt of Small Corp. Synergies from the transaction are expected to be $80 million. Calculate the new share price of Big Corp after the acquisition ( P_Big+Small ).

Answer rating: 100% (QA)

To calculate the new share price of Big Corp PBigSmall after the acquisition of Small Corp we first ... View the full answer