If jkl offers 12 million shares of its stock for the 20, Finance Basics

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If jkl offers 12 million shares of its stock for the 20

JKL Company wants to acquire MNO Company.
• JKL has a market value of $500 million with 30 million shares of common stock in the hands of investors.
• MNO has a market value of $180 million with 20 million shares of common stock in the hands of investors.
• The combined firm would have a value of $720 million.
• MNO can be purchased by JKL for a premium over market value of $25 million.

a) If JKL offers 12 million shares of its stock for the 20 million of MNO's stock that is outstanding, what is the resulting stock price of JKL after completing the acquisition?

b) If the value of the acquisition were the equivalent of $205 million in cash, what exchange ratio between the two stocks would make that happen?

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Finance Basics: If jkl offers 12 million shares of its stock for the 20

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Finance Basics: If jkl offers 12 million shares of its stock for the 20

Reference No:- TGS0597985

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