G is negotiating an acquisition of K. The tentative agreed upon value is $27 per share (all cash offer) for K's stock. You work for the investment banking firm representing G. You have compiled the following information: Pre merger price Shs out (mill) Pre merger mkt value (mill) Synergies value (mill) G 36.00 50.00 1,800.00 120 K 24.00 24.00 576.00 Calculate the following: A. Post merger value of the combined company B. Calculate the gains accruing to the target C. Calculate the gains accruing to the acquirer

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Y2

G is negotiating an acquisition of K. The tentative agreed upon value is $27 per share (all cash offer) for K's stock.
You work for the investment banking firm representing G. You have compiled the following information:
Pre merger price
Shs out (mill)
Pre merger mkt value (mill)
Synergies value (mill)
G
36.00
50.00
1,800.00
120
K
24.00
24.00
576.00
Calculate the following:
A. Post merger value of the combined company
B. Calculate the gains accruing to the target
C. Calculate the gains accruing to the acquirer
Transcribed Image Text:G is negotiating an acquisition of K. The tentative agreed upon value is $27 per share (all cash offer) for K's stock. You work for the investment banking firm representing G. You have compiled the following information: Pre merger price Shs out (mill) Pre merger mkt value (mill) Synergies value (mill) G 36.00 50.00 1,800.00 120 K 24.00 24.00 576.00 Calculate the following: A. Post merger value of the combined company B. Calculate the gains accruing to the target C. Calculate the gains accruing to the acquirer
Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education