The managers of company A are negotiating with the managers of company B a corporate operation...

 

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The managers of company A are negotiating with the managers of company B a corporate operation whereby company A wishes to proceed with a merger by absorption of company B. The valuation of the synergies that the operation could generate has been carried out and it has been estimated that the two companies are worth together EUR 40,000,000 more than they are worth separately. Company A considers two takeover bids for all of the shares of B: Bid 1. Company A would pay 1 share of A for each 0,8 of B. The shares of A delivered come from a capital increase of company A in which its shareholders waive their pre-emptive subscription rights. Bid 2. Company A would pay 14.5 euros for each share of B. Just before the merger, company A has a capital of 20,000,000 shares, with a nominal value of EUR 1 and a market share price of EUR 12 euros. At the same time, company B has a capital of 12,000,000 shares with a nominal value of EUR 2 euros and a market share price of EUR 14. What would be, both in Bid 1 and Bid 2, the post-takeover gain per share for the former shareholders of the two merging companies? The managers of company A are negotiating with the managers of company B a corporate operation whereby company A wishes to proceed with a merger by absorption of company B. The valuation of the synergies that the operation could generate has been carried out and it has been estimated that the two companies are worth together EUR 40,000,000 more than they are worth separately. Company A considers two takeover bids for all of the shares of B: Bid 1. Company A would pay 1 share of A for each 0,8 of B. The shares of A delivered come from a capital increase of company A in which its shareholders waive their pre-emptive subscription rights. Bid 2. Company A would pay 14.5 euros for each share of B. Just before the merger, company A has a capital of 20,000,000 shares, with a nominal value of EUR 1 and a market share price of EUR 12 euros. At the same time, company B has a capital of 12,000,000 shares with a nominal value of EUR 2 euros and a market share price of EUR 14. What would be, both in Bid 1 and Bid 2, the post-takeover gain per share for the former shareholders of the two merging companies?

Answer rating: 100% (QA)

For Bid 1 Company A would issue 20000000 shares 08 25000000 shares of A to acquire all of the shares of B The market capitalization of A before the me... View the full answer