Consider the following information for the two companies, SpaceC and Alexa: SpaceC Alexa Shares outstanding 100 50 Price per share $50 $30 SpaceC is considering acquiring Alexa. It estimates that in doing so the synergistic benefit would be $200. Alexa says that it would accept an offer to be sold at $35 per share. Should SpaceC proceed and purchase Alexa? At what price would SpaceC be indifferent to making the acquisition of Alexa? Assuming the acquisition was at $35, what level of synergies (not $200) would there have to be to make the acquisition make sense for SpaceC?
Consider the following information for the two companies, SpaceC and Alexa: SpaceC Alexa Shares outstanding 100 50 Price per share $50 $30 SpaceC is considering acquiring Alexa. It estimates that in doing so the synergistic benefit would be $200. Alexa says that it would accept an offer to be sold at $35 per share. Should SpaceC proceed and purchase Alexa? At what price would SpaceC be indifferent to making the acquisition of Alexa? Assuming the acquisition was at $35, what level of synergies (not $200) would there have to be to make the acquisition make sense for SpaceC?
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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Consider the following information for the two companies, SpaceC and Alexa:
SpaceC Alexa Shares outstanding 100 50 Price per share $50 $30
SpaceC is considering acquiring Alexa. It estimates that in doing so the synergistic benefit would be $200. Alexa says that it would accept an offer to be sold at $35 per share.
Should SpaceC proceed and purchase Alexa?
At what price would SpaceC be indifferent to making the acquisition of Alexa?
Assuming the acquisition was at $35, what level of synergies (not $200) would there have to be to make the acquisition make sense for SpaceC?
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