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Business, 21.12.2019 02:31 antmike31ox1v8e

Consider the following premerger 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 5,800 1,300
price per share $ 45 $ 16
firm b has estimated that the value of the synergistic benefits from acquiring firm t is $9,400. firm t can be acquired for $18 per share in cash or by exchange of stock wherein b offers one of its share for every two of t's shares.
1. are the shareholders of firm t better off with the cash offer or the stock offer?
2. at what exchange ratio of b shares to t shares would the shareholders in t be indifferent between the two offers?

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Consider the following premerger information about a bidding firm (firm b) and a target firm (firm t...
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