1. The NFF Corporation has announced plans to acquire LECorporation. NFF is trading for $ 32 per​ share, and LE is tradingfor $65 per​ share, implying a​ pre-merger value of LE ofapproximately $ 8.6 billion. If the projected synergies are $1.04​billion, what is the maximum exchange ratio NFF could offer in astock swap and still generate a positive​ NPV?

1. ABC has 11 million shares​ outstanding, each of which has aprice of $23. It has made a takeover offer of XYZ Corporation whichhas 1 million shares​ outstanding, and a price per share of $ 2.43.Assume that the takeover will occur with certainty and all marketparticipants know this. Furthermore, there are no synergies tomerging the two firms.

1. Assume ABC made a cash offer to purchase XYZ for $ 3.2 million.What happens to the price of ABC and XYZ on the​ announcement? Whatpremium over the current market price does thisoffer​represent?
2. Assume ABC makes a stock offer with an exchange ratio of 0.14.What happens to the price of ABC and XYZ this​ time? What premiumover the current market price does this offer​ represent?
3. At current market​ prices, both offers are offers to purchaseXYZ for $3.2 Million. Does that mean that your answers to parts​(a​) and ​(b​) must be​identical? Explain.

1. You work for a leveraged buyout firm and are evaluating apotential buyout of UnderWater Company.​ UnderWater's stock priceis $18 and it has 1.75 million shares outstanding. You believe thatif you buy the company and replace its​ management, its value willincrease by 44%. You are planning on doing a leveraged buyout ofUnderWater and will offer $22.50 per share for control of thecompany.
   1. Assuming you get​ 50% control, what will happen to the priceof​ non-tendered shares?
   2. Given the answer in part ​(a​), willshareholders tender their​ shares, not tender their​ shares, or be​indifferent?
   3. What will your gain from the transaction​ be?