Firm C has a market value of $500 million and the stock is trading at $25 per share. Firm D has a market value of $100 million and the stock is trading at $50 each. Firm C is contemplating acquiring firm D. Firm C’s CFO estimates that the combined firm will be worth $750 million and firm D can be acquired at an acquisition premium of $95 million.

1. If for the outstanding shares of firm D, firm C is willing to offer its 5 million shares to exchange in this acquisition, what will be the post-acquisition stock price of the merged firm?

Answer rating: 100% (QA)

Calculating the PostAcquisition Stock Price Total Shares Outstanding Before Acquisition Firm C 500 m... View the full answer