Question: Need help solving this Problem 2 (8 marks) Acquirer fin plans to launch a takeover of Target firm. The deal is expected to create a

Need help solving this

Need help solving this Problem 2 (8 marks) Acquirer fin plans to

Problem 2 (8 marks) Acquirer fin plans to launch a takeover of Target firm. The deal is expected to create a present value of synergies totalling 5200 million. Firms involved in the Takeover Share price (8) Number of shares (m) Acquirer Target 50 25 80 20 Ignore transaction costs and fees. Assume that the firm' debt and equity are fairly priced, and that each firm's debes' risk. yield and values remain constant. The acquisition is planned to occur immediately. so ignore the time value of money. Assume a stock swap offer will be made. Calculate the exchange ratio which splits the total synergy equally between Acquirer and Target. (8 marks)

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