Firm A is contemplating acquiring firm B by stock payment.  In order to comfort the shareholders of firm B, firm A provides contingent value rights (CVR) to shareholders of firm B:   each newly issued share of firm A will receive a cash payment equal to the difference between $33 and the stock price of firm A one year after deal closing, up to a maximum of $3.30.

 

1b) How much will shareholder of firm B receive from firm A if firm A stocks end up trading at $31.30 per share one year after deal closing?

1b) How much will shareholder of firm B receive from firm A if firm A stocks end up trading at $33.30 per share one year after deal closing?

Answer rating: 100% (QA)

1b If firm As stocks end up trading at 3130 per share one year after deal closing The stock price of ... View the full answer