Consider this hypothetical scenario where firm x acquire firm Y

 Firm X merged with Firm Y in a stock swap transaction valued at USD 15.25 billion. Company X offered USD 19.5 in cash per share and 0.65 common shares per Company Y share. Based on Company X closing stock price of USD 46.28 on 15 August 2022, the last full trading day prior to the announcement, each Company Y share was valued at USD 49.982. On completion, the new company was named Firm Z, and Firm X and Firm Y owned 62% and 38% in Firm Z, respectively.

 

Transaction Value = USD 15.25 billion

Cash = 40.328 

Stock = 59.672

 

Offer a recommendation about the target firm valuation, and the maximum premium to be offered . And include assumptions, calculations and scenarios. Then Explain the advantages and disadvantages of the chosen method(s)

Answer rating: 100% (QA)

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