Harrods PLC has a market value of £600 million and 30 million shares outstanding. Selfridge Department Store has a market value of £200 million and 20 million shares outstanding. Harrods is contemplating acquiring Selfridge Department Store. Harrnds' CFO concludes that the combined firm with synergy will be worth £1 billion and Selfridge can be acquired at a premium of £100 million. To make the value of stock offer equivalent to a cash offer of £300 million, how many stock of Harrods should be exchanged for every 1000 stocks of Selfridge?
Harrods PLC has a market value of £600 million and 30 million shares outstanding. Selfridge Department Store has a market value of £200 million and 20 million shares outstanding. Harrods is contemplating acquiring Selfridge Department Store. Harrnds' CFO concludes that the combined firm with synergy will be worth £1 billion and Selfridge can be acquired at a premium of £100 million. To make the value of stock offer equivalent to a cash offer of £300 million, how many stock of Harrods should be exchanged for every 1000 stocks of Selfridge?
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
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Transcribed Image Text:Harrods PLC has a market value of £600 million and 30 million shares outstanding.
Selfridge Department Store has a market value of £200 million and 20 million
shares outstanding. Harrods is contemplating acquiring Selfridge Department
Store. Harrnds' CFO concludes that the combined firm with synergy will be worth
£1 billion and Selfridge can be acquired at a premium of £100 million.
To make the value of stock offer equivalent to a cash offer of £300 million, how
many stock of Harrods should be exchanged for every 1000 stocks of Selfridge?
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