Consider the following premerger information about Firm X and Firm Y:
Total earnings Shares outstanding Per-share values: Market book
Firm X $ 96,000 53,000 53 14
Firm Y $ 22,500 18,000 18 8
Assume that Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $5 per share, and that neither firm has any debt before or after the merger. Construct the postmerger balance sheet for Firm X assuming the use of the purchase accounting method. (Do not round intermediate calculations.)
Assets from X $
Assets from Y
Goodwill
Total Assets XY $
Under purchase accounting, method | ||||||||
Record assets of acquiring company (X) at book value | ||||||||
Record assets of target company (Y) at market value | ||||||||
Post-merger balance sheet: | ||||||||
$ | ||||||||
Assets from X | (53000*14) | 742000 | ||||||
Assets from Y | (18000*18) | 324000 | ||||||
Goodwill | (Note:1) | 90000 | ||||||
Total Assets XY | 1156000 | |||||||
Note:1- Goodwill | ||||||||
$ | ||||||||
Purchase consideration | 18000*(18+5) | 414000 | ||||||
(market value+merger premium)* shares outstanding) | ||||||||
Less:assets from Y | 324000 | |||||||
Goodwill | 90000 | |||||||
Consider the following premerger information about Firm X and Firm Y: Total earnings Shares outstanding Per-share...
a 63) Firm X has total earnings ofS49,000, a market value per share of S64, abook value share of $38, and has 25,000 shares outstanding. Firm Y has total earnings of $34,000, a market value per share of $21, a book value per share of $12, and has 22,000shares outstanding. Assame Firm X acquires Firm Y by paying cash for all the shares outstanding at a merger premium of $2 per share. Also assume neither firm has any debe before...
Consider the following premerger information about a bidding firm (Firm A) and a target firm (Firm B). Assume that both firms have no debt outstanding. Firm A Firm B Share price 50 20 Number of shares 10,000 3,000 Firm A has estimated that the value of the synergistic benefits from acquiring Firm B is $50,000. If Firm B is acquired for $30 per share in cash, what is the merger premium in this merger? If Firm B is acquired for...
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 5,400 & 2,000. Price per share $ 44 & $ 18 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $9,200. a. If Firm T is willing to be acquired for $20 per share in cash, what is the NPV of...
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 4,800 1,800 Price per share $ 47 $ 20 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $9,100. a. If Firm T is willing to be acquired for $22 per share in cash, what is the NPV of the merger? (Do...
11) Firm X has a market value of S8,400 with 120 shares outstanding and a price per share of $70. Firm Y has a market value of S2,000 with 100 shares outstanding and a price per share of S20. Firm X is acquiring Firm Y by exchanging 30 of its shares for all 100 of Firm Y's shares. Assume the merger creates S400 of synergy. What will be the value of Firm X's shareholders' stake in the merged firm? A) $9,050 B)...
Your company has earnings per share of $4. It has 1 million shares outstanding, each of which has a price of $40. You are thinking of buying TargetCo, which has earnings per share of $2,1 million shares outstanding, and a price per share of $25. You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction. a. If you pay no premium to buy TargetCo, what will be your earnings per share after the...
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 5,600 2,200 Price per share $ 45 $ 19 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $9,300. Firm T can be acquired for $21 per share in cash or by exchange of stock wherein B offers one of...
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 6,000 1,200 Price per share $ 47 $ 17 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $9,500. Firm T can be acquired for $19 per share in cash or by exchange of stock wherein B offers one of its share...
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 6,200 1,400 Price per share $ 48 $ 18 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $9,600. Firm T can be acquired for $20 per share in cash or by exchange of stock wherein B offers one of...
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 6,000 1,200 Price per share $ 47 $ 17 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $9,500. Firm T can be acquired for $19 per share in cash or by exchange of stock wherein B offers one of its share...