Company A considers acquiring company B. Shares of the company A trade at $30 and there are 5,000 of A shares outstanding. Company B has 200 shares outstanding worth $100 each. If A acquires B, then the resulting synergy will amount to $10,000. Suppose A offers to exchange every B's share for four shares in the merged company. What will be the total benefit for the existing shareholders of A?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Company A considers acquiring company
B. Shares of the company A trade at
$30 and there are 5,000 of A shares
outstanding. Company B has 200 shares
outstanding worth $100 each. If A
acquires B, then the resulting synergy will
amount to $10,000.
Suppose A offers to exchange every
B's share for four shares in the merged
company.
What will be the total benefit for the
existing shareholders of A?
Transcribed Image Text:Company A considers acquiring company B. Shares of the company A trade at $30 and there are 5,000 of A shares outstanding. Company B has 200 shares outstanding worth $100 each. If A acquires B, then the resulting synergy will amount to $10,000. Suppose A offers to exchange every B's share for four shares in the merged company. What will be the total benefit for the existing shareholders of A?
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