Question: This is my second time asking for help on this question. Previous answers on Chegg are incorrect. Consider the following premerger information about a bidding
This is my second time asking for help on this question. Previous answers on Chegg are incorrect.
| Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. |
| Firm B | Firm T | |||||
| Shares outstanding | 5,400 | 2,000 | ||||
| Price per share | $ | 44 | $ | 18 | ||
| Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $9,200. Firm T can be acquired for $20 per share in cash or by exchange of stock wherein B offers one of its share for every two of T's shares. |
| Are the shareholders of Firm T better off with the cash offer or the stock offer? | ||||
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| At what exchange ratio of B shares to T shares would the shareholders in T be indifferent between the two offers? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) |
| Exchange ratio |
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