mergers and acquisitions

Question 1

how to calculate share price of Acquirer after market?

Answer 1

• combined firm value/ total no. of shares
• combined firm value = synergy + Va + Vt
• total no. of shares = shares o/s of Acquirer + (if stock exchange for consideration)+ new issued shares given to target

Question 2

How to calculate and apply the stock exchange ratio

Answer 2

The stock exchange ratio is used to calculate the no. of new shares that should be issued from the acquirer for consideration:
stock exchange ratio x no. of shares in Target firm

Question 3

How to calculate the share price of the target after announcement

Answer 3

= no. of shares issued for consideration x shareprice of A after announcement/ combined firm. / (no. of shares in individual target company)