2. Company currently sells for $24/share. Management holds 40% of the 1 million shares outstanding....
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2. Company currently sells for $24/share. Management holds 40% of the 1 million shares outstanding. Chang Inc. is considering acquiring Li because of positive synergies. The estimated present value of these synergies is $8 million. In addition, Chang feels that the management of Li is overpaid and have a lot of unnecessary perks like yachts and jets to fly around. Getting rid of all these will save the firm about $400,000 per year. This would add $3 million in value to the acquisition.
What is the maximum price per share that Chang should pay?
What price would you offer?
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