Question: please include steps and explanations! thanks ABC Corp. has a market value of $600 million and 30 million shares outstanding. XYZ Inc. has a market

please include steps and explanations! thanks please include steps and explanations! thanks ABC Corp. has a market value

ABC Corp. has a market value of $600 million and 30 million shares outstanding. XYZ Inc. has a market value of $200 million and 20 million shares outstanding. ABC is contemplating acquiring XYZ. ABC 's CFO concludes that the combined firm with synergy will be worth $1 billion and XYZ can be acquired at a premium of $150 million. A) If ABC offers 15 million shares to exchange for the 20 million shares of XYZ, what will the post-acquisition stock price of ABC be? B) To make the value of stock offer equivalent to a cash offer of $300 million, what would be the proper exchange ratio of the two stocks

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!