Merger Premiums per Share
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Brown's, Inc. and Greystone, Inc. are all-equity firms. Brown's has 1,500 shares outstanding at a market price of $21 a share. Greystone has 2,500 shares outstanding at a price of $38 a share. Greystone is acquiring Brown's for $36,000 in cash. What is the merger premium per share?
a. $3.00
b. $4.00
c. $6.50
d. $8.00
e. $14.00
Jackie's Boutique has 2,000 shares outstanding at a market price per share of $25. Sarah's has 3,000 shares outstanding at a market price of $40 a share. Neither firm has any debt. Sarah's is acquiring Jackie's for $58,000 in cash. What is the merger premium per share?
a. $1.43
b. $1.62
c. $1.81
d. $3.00
e. $4.00
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Solution Summary
Basic calculations to answer 2 multiple choice questions on merger premiums per share.
Solution Preview
First question - A. $3.00
Second question - E. $4.00
First question:
1500 shares x 21.00 = ...
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