offered $870 million cash for all of the common stock in Universal Corporation. Based on recent market information, Universal is worth $730 million as an independent operation. For the merger to make economic sense for RCC, what would the minimum estimated present value of the enhancements from the merger have to be? MV as an independent operation Min. amount of synergies to justify the offer price Offer price (Sm)

offered $870 million cash for all of the common stock in Universal Corporation. Based on recent market information, Universal is worth $730 million as an independent operation. For the merger to make economic sense for RCC, what would the minimum estimated present value of the enhancements from the merger have to be? MV as an independent operation Min. amount of synergies to justify the offer price Offer price (Sm)

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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Castles in the Sand currently sells at a price-earnings multiple of 24. The firm has 2 million shares outstanding and sells at a price per share of $60. Firm Foundation has a P/E multiple of 12, has 1 million shares outstanding, and sells at a price per share of $30. a. If Castles acquires the other firm by exchanging one of its shares for every two of Firm Foundation, what will be the earnings per share of the merged firm? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. What will be the price per share for Castle? Note: Do not round intermediate calculations. c. What would be Firm Foundation's value of stock post merger? Note: Do not round intermediate calculations. Enter your answer in millions. d. What should be the P/E of the new firm if the merger has no economic gains? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. e. Calculate Castles' price per share if the market does not realize that the P/E ratio…
Firm B Firm A $ Firm AB Price Per Share Total Earnings (millions) Shares Outstanding (millions of shares) Total Value (millions) 75 $ 40 $ 300 $ 200 200 60 $ 15,000 $ 2,400 $ 20,000 Firm A has proposed to acquire Firm B at a price of $65 per share for Firm B's stock. a) What is the NPV of the merger to Firm A? What is the NPV of the merger to Firm B? b) What will be the post-merger price per share for Firm A's stock if Firm A pays in cash? c) To make the value of a stock offer equivalent to a cash offer of $3,900 million, how many shares should Firm A give to the owners of Firm B?
Consider the following premerger information about Firm X and Firm Y: Firm X Firm Y Total earnings $ 95,000 $ 22,000 Shares outstanding 52,000 17,000 Pre-share values: Market $ 52 $ 21 Book $ 15 $ 10 Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $6 per share, and that neither firm has any debt before or after the merger. a. Assuming the pooling of interests method is used, what is the equity of the combined firm? Equity value $ b. List the assets of the combined firm assuming the purchase accounting method is used. Assets from X $ Assets from Y Goodwill Total Assets XY $ Please dont provide solution image based thnx
Linpro Industries is considering the acquisition of Odetics Inc. in a stock-for-stock exchange. Assume no immediate synergistic benefits are expected. Selected financial data on the two companies are shown below: Linpro Odetics Sales (millions) $480 $90 Net income (millions) $38 $10.4 Common shares outstanding (millions) 10 2.1 Earnings per share $3.80 $4.95 Common stock (price per share) $45.60 $74.25 Calculate Linpro's post-merger EPS if the Odetics shareholders accept an offer of $90 a share in a stock-for-stock exchange. Question 9Answer a. $4.38 b. $3.81 c. $4.29 d. $3.42
CONSOLIDATION FOR SMES (excluding Intercompany Sales) PROBLEM I. P Corporation, an SME, paid P3,000,000 for a 90% interest in S Company on January 1, 2019. The stockholders of S Company included share capital of P2,000,000 and retained earnings of P1,000,000. Of the excess of total consideration (purchase price plus NCI) over book value, P200,000 is attributable to undervalued inventories and the remainder to goodwill. All inventories are sold in 2019. S's net income for the year is P522,500 and P's net income is P1,500,000 including dividends received from S in the amount of P90,000. 1. How much is the NCI at the end of 2019? 2. Net Income Attributable to Parent.
Firm A is planning on merging with Firm B. Firm A will pay Firm B's stockholders the current value of their stock in shares of Firm A. Firm A currently has 1,800 shares of stock outstanding at a market price of $40 a share. Firm B has 1,200 shares outstanding at a price of $47 a share. What is the value per share of the merged firm?
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Need help with the following questions please. One company that the analysis indicated as potentially suitable for acquisition by Admiral isFavorite Food Systems Inc. Favorite Food Systems Inc. which was founded by John Favorite in 1994, is a WestCoast chain with current annual sales of approximately $75 million. n 2003, the company went public.(The Favorite family now controls about 57 percent of the common stock.) 1. Calculate the pre-merger earnings per share for Admiral and Favorite and the pre-merger price-to-earnings (P/E) ratio for each company (based on the stated prices per share). 2. Calculate three additional exchange ratios of Admiral shares for each share of Favorite. Assume a 15%, 20%, and 25% premium price per share over the stated Favorite price of $15 per share. 3. Calculate the Admiral Foods post-merger income statement and earnings per share, assuming an exchange ratio of 0.45.
Q1. Plint Corporation exchanged shares of its $2 par common stock for all of Sark Company's assets and liabilities in a planned merger. Immediately prior to the combination, Sark's assets and liabilities were as follows: Assets Cash and Equivalents Accounts Receivable Inventory Land Buildings Equipment Accumulated Depreciation Total Assets Liabilities and Equities Accounts Payable Short-Term Notes Payable Bonds Payable Common Stock ($10 par) Additional Paid-In Capital Retained Earnings Total Liabilities and Equities $ 41,000 73,000 144,000 200,000 1,520,000 638,000 (431,000) $ 2,185,000 $ 35,000 50,000 500.000 1,000,000 325,000 275,000 $ 2,185,000 onal paid-in capita Immediately prior to the combination, Plint reported $250,000 $1,350,000 retained earnings. fair values of Sark's assets and liabilities were equal to their book values on the date of combination except that Sark's buildings were worth $1,500,000 and its equipment was worth $300,000. Costs associated with planning and…
ABC will be merging with Target Corporation. Equity values were gathered as follows: ABC, separate equity value = P13,000,000; Target, separate equity value = P2,500,000. The merged entity, ACBT Inc., will have annual net earnings of P3,060,000 and a required return on equity of 18%. *How much is the value of synergy of the merger?
A merger between Minnie Corporation and Mickey Corporation is under consideration. The financial information for these firms is as follows: Minnie Corporation Mickey Corporation Total earnings $1,682,000 $2,581,000 Number of shares of stock outstanding 290,000 890,000 EPS $5.80 $2.90 P/E ratio 10X 20X Market price per share $58 $58 a. On a share-for-share exchange basis, what will the postmerger EPS be? (Round the final answer to 2 decimal places.) Postmerger earnings per share $ b. If Mickey Corporation pays a 25 percent premium over the market value of Minnie Corporation, how many shares will be issued? (Do not round intermediate calculations.) Shares issued shares c. With the 25 percent premium, what will the postmerger EPS be? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Postmerger earnings per share $
Principal, Inc. is acquiring Secondary Companies for $29 million in cash. Principal has 2.5 million shares of stock outstanding at a market price of $30 a share. Secondary has 1.6 million shares of stock outstanding at a market price of $15 a share. Neither firm has any debt. The synergy gains of the acquisition is $4.5 million. What is the NPV of the acquisition?

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