Use the following information to answer the next 3 questions.
Firm B is going to acquire Firm T.
Firm B (Bidder)
Firm T (Target)
Shares Outstanding
220,000
150,000
Price per Share
$120
$70
Earnings
$1,800,000
$1,200,000
Question 6: Firm B will pay $75.25 per share in cash for each share of Firm T. The
synergies are $5,600,000. What was the NPV of the takeover?
a)
$4,812,500
b)
$2,025,000
c)
$3,575,000
d)
$787,500
e)
None of the above
Question 7: Assuming that the synergies are $2,700,000 and that Firm B will pay $74.50
in cash for each share of Firm T. What will be the price per share of firm B after the
acquisition is completed?
a) $132.27
b) $120.00
c) $129.20
d) $88.00
e) None of the above
Question 8: Assuming that the synergies are $3,700,000 What is the maximum price per
share that firm B can offer to pay Firm T?
a) $70.00
b) $120.00
c) $144.67
d) $94.67
e) None of the above