1．g Steel is considering making a bid for Small Steel. The following data applies to the analysis:
| Big Steel | | Small Steel |
Pre-merger stock price | $75 | | $100 |
Number of shares outstanding | | ||
Pre-merger market value | $ | | $ |
Estimated synergies | | $ | |
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?
| Big Steel | Small Steel |
B)$
C)$
D)$
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.
3．g Steel is considering making a bid for Small Steel. The following data applies to the analysis:
| Big Steel | | Small Steel |
Pre-merger stock price | $75 | | $100 |
Number of shares outstanding | | ||
Pre-merger market value | $ | | $ |
Estimated synergies | | $ | |
If Big Steel buys Small Steel for $110 per share in cash, what are the gains to Big Steel and Small Steel, respectively?
| Big Steel | Small Steel |
A) $
B) $
C) $
D) $
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:
| Big Steel | | Small Steel |
Pre-merger stock price | $75 | | $100 |
Number of shares outstanding | | ||
Pre-merger market value | $ | | $ |
Estimated synergies | | $ | |
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?
| Big Steel | Small Steel |
A) $
B)$
C)$
D)$
The correct answer was B)
Value after takeover = $37,500 + $4,000 + $600 = $
Shares exchanged for Small Steel = 1.45 x
Post-takeover share price = value after takeover / shares outstanding =
Takeover price = number of shares to small steel x post-takeover share price =
Gains to Small Steel = takeover premium = $4,376.1 – $4,000 = $
Gains to Big Steel = synergies – takeover premium = $600 – $376.1 = $
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:
| Big Steel | | Small Steel |
Pre-merger stock price | $75 | | $100 |
Number of shares outstanding | | ||
Pre-merger market value | $ | | $ |
Estimated synergies | | $ | |
If Big Steel buys Small Steel for $110 per share in cash, what are the gains to Big Steel and Small Steel, respectively?
| Big Steel | Small Steel |
A) $
B) $
C) $
D) $
The correct answer was D)
Gains to Small Steel = takeover premium = $4,400 – $4,000 = $
Gains to Big Steel = synergies – takeover premium = $600 – $400 = $200.
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