Pinder Co wants to acquire Pioneer Co because it believes that there would be synergistic benefits of $500 million. Pinder Co offers the shareholders of Pioneer Co 5 of its own shares for 3 of Pioneer's shares. Pinder Co's shares are currently trading for $15 and Pioneer Co's shares are trading for $20. Pinder Co has 100 million shares outstanding and Pioneer Co has 50 million shares outstanding. What would be the value of the combined company?
Added by Timothy M.
Step 1
Pinder Co is offering 5 of its shares for 3 of Pioneer's shares, so the exchange ratio is 5/3. To calculate the value of Pioneer Co, we can use the following formula: Value of Pioneer Co = Number of Pioneer Co shares outstanding x Pioneer Co share price x Show more…
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