Reading 35: Mergers and Acquisitions - LOS m ～ Q1-3

答案和详解如下：

1．g Steel is considering making a bid for Small Steel. The following data applies to the analysis:

If Big Steel buys Small Steel by exchanging 1.45 shares of its stock for each share of Small Steel, what are the gains to Big Steel and Small Steel, respectively?

A) $100.8m                                              $491.3m

B)$223.9m                                              $376.1m

C)$246.2m                                              $353.8m

D)$353.8m                                              $246.2m

The correct answer was B)

Value after takeover = $37,500 + $4,000 + $600 = $42,100m.
Shares exchanged for Small Steel = 1.45 x 40m = 58m.
Post-takeover share price = value after takeover / shares outstanding = 42,100m / 558m = $75.45.
Takeover price = number of shares to small steel x post-takeover share price = 58m x $75.45 = $4,376.1m.
Gains to Small Steel = takeover premium = $4,376.1 – $4,000 = $376.1m.
Gains to Big Steel = synergies – takeover premium = $600 – $376.1 = $223.9m.

2．ich of the following statements concerning the gains from a merger are least accurate?

A)   In a stock offer, gains to the target shareholders are dependent upon the post-merger stock price of the acquirer.

B)   In a cash offer, the target shareholder’s gains are capped at the amount of the takeover premium.

C)   In a stock offer, the target shareholder’s gains are less than those from a comparable cash offer.

D)   Gains to the acquirer are a function of the difference between the synergies realized and the takeover premium.

The correct answer was C)

In a stock offer, the target shareholder’s gains will generally exceed those from a comparable cash offer. This, of course, depends upon the acquirer’s stock price following the merger. But, if the exchange ratio is based upon the acquirer’s pre-merger price, and if the post-merger price exceeds the pre-merger price, the target’s gains from the stock offer should be greater than those from a cash offer.

3．g Steel is considering making a bid for Small Steel. The following data applies to the analysis:

If Big Steel buys Small Steel for $110 per share in cash, what are the gains to Big Steel and Small Steel, respectively?

A)       $500m                                  $100m

B)      $400m                                  $200m

C)      $300m                                  $300m

D)      $200m                                  $400m

The correct answer was D)

Gains to Small Steel = takeover premium = $4,400 – $4,000 = $400m.
Gains to Big Steel = synergies – takeover premium = $600 – $400 = $200.