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"Firm B's one million shares of stock currently se...




"Firm B's one million shares of stock currently sell for $20 each. Firm A estimates the economic gain from the merger to be $10 million and is prepared to offer $22 cash for each share of B. What percent of the merger gain will be captured by firm B's shareholders? Question options: 1) 20.00% 2) 33.33% 4) 60.00% A merger is expected to produce cost savings of $50 million and the acquired firm's shareholders will receive a premium of 20% over the $150 million value of their firm. The gain of the merger to the acquirer is: Question options: 1) $20 million. 2) $30 million. 4) $130 million. Which of the following is the most appropriate reason for an acquiring firm's shareholders to prefer using stock financing for acquisitions? Question options: 1)There is no cash outflow. 2)It mitigates the effects of over valuation of the target firm. 3)It mitigates the effects of under valuation of the target firm. Empirical studies show that the operating efficiency of firms having undergone a leverage buy-out, ______ over the following 3 years. Question options: 1) Increase 3)Does not change 4) Shows no clear trend When two firms merge, the value of the acquiring firm will change by the: Question options: 1)gain from the merger. 3)NPV of the merger. 4)cost of the merger.


Paper#6867 | Written in 18-Jul-2015

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