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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Question
F1
Transcribed Image Text:Consider the following financial information
for a bidder and a target.
A$ million
Bidder Co
Target Co
Stand alone EV
600
150
Net Debt
(50)
(50)
Shares on Issue (millions)
110
50
Following extensive financial modelling, the
combination DCF equity value of the two
companies is found to be $675 million. Based
on this information, and ignoring transaction
costs, what is the maximum reservation
exchange ratio (RER) for Bidder Co?
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