Consider the following pre-merger information about a bidding firm (Firm B) and a target firm...
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Accounting
Consider the following pre-merger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding.
| Firm B | Firm T | |
| Shares Outstanding | 8,700 | 3,600 |
| Price per Share | $47 | $19 |
Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $16,700. Suppose Firm B agrees to a merger by an exchange of stock. If B offers one of its shares for every 2 of T's shares.
What will be the price per share of the merged firm?
| $46.58 | ||
| $48.14 | ||
| $48.09 | ||
| $47.05 |
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