Steven Enterprises can acquire Michael, Inc for $250 000 in either cash or shares. Both companies are 100% equity financed. The synergy value of the acquisition for Steven is $38 000. Currently, Steven has 25000 shares outstanding that trade at $30 a share, whereas Michael has 17 000 shares outstanding that trade at $14 a share. 

What is the value of Michael to Steven? 

How many shares would be given to Michael’s shareholders in a share-financed deal? 

For Steven and Michael, what would be the exchange ratio in a pure share exchange merger? What is the net value of the acquisition to Steven if cash is used? 

For Steven and Michael, what is the value of the post-merger company if cash is used? 

For Steven and Michael, what is the share price of the new company after a cash acquisition?

Answer rating: 100% (QA)

value of Michael to steven 250000 38000 288000 Number of shares that would be given to Mic... View the full answer