Company A has agreed to buy Company B for $48.00/share in stock. Company A andCompany B's stock prices on the day before announcement were $112.00 and $42.00respectively. Company B has 20 million shares outstanding, 12 million exercisable optionsoutstanding with an average exercise price of $28.00 per share, $120 million in net debt tobe assumed by Company A and minority interests of $25 million to be acquired for cash.O 17.3215.75O 19.65Company B Income Statement ItemsCalculate the equity to net income multiple.20.00LTM RevenueLTM EBITDALTM Net Income$1000 million95 million60 million

Equity value = 48*20 = 96 millionAs exercised price is below 48, option must be exercised which will…

Answered: Company A has agreed to buy Company B…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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