# Corp Fin. Takeover Premium

Was the 1st answer 105 Million for the TP, and question 2 the answer was 0- which was A i believe????

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yes.

Get over there...

78 and 27, you forgot the dilution

that’s what I got, too.

105 and zero

mcleod, what about the dilution?

I remember I got 0 too.

105 and zero for me as well

105 and zero.

Can’t remember the details of the numbers for this question. I remember that 105 and zero made absolute sense on Saturday though.

78 and 0… reason is that you have to add in synergies of 0 in the first case and 105 in the second case:

so for 1) 495+1750/47 m shares outstanding = like 47.28 or something(lower than 50!), so hit to acquirer, gain to target of equivalent amounts (78 in this case)

for 2) 495+1750+105/47 = 50, so no hit to acquirer, all gains to target

dirty - that might be right, i’m pretty sure 105 and 0 is wrong

yeah man i went 105 0, regretting it, but 1/2 aitn bad i suppose

Actually dirty, I think I did get something like 78 for the first part.

it is talking about total gain, where is the no of shares come into play?! The 105 and 0 are total, not per share based.

Get over there...

I thought the second bit said they pay in cash and then the synergies are 105?

well same answer right? if they paid .8*15m*50\$ then they paid 600 for the firm was worth 495+105 to them

I put 78 and 27

For the first question, you had to assume no synergies. Gain to target is 47(find combined value of both companies per combined shares and multipy by 12 m, the shares owned by target). Take that amount and minus MV of target you get 78.

For second question, you had to take account the synergies ,so synergies(the gain to acquirer 105) minus the gain to the target (78) gives 27

105, zero

dirtydirty Wrote:
——————————————————-
> 78 and 0… reason is that you have to add in
> synergies of 0 in the first case and 105 in the
> second case:
>
> so for 1) 495+1750/47 m shares outstanding = like
> 47.28 or something(lower than 50!), so hit to
> acquirer, gain to target of equivalent amounts (78
> in this case)
>
> for 2) 495+1750+105/47 = 50, so no hit to
> acquirer, all gains to target

To put this to rest, you’re correct with the first bit, Dirty.

For the second bit, gains to acquirer = Synergies - TP
Here you won’t divide the synergies by the shares, the loss to acquirer from giving shares has already been accounted for in the TP.
So it would be 105 - 78 = 27

Ok guys………. I question on this Vignette………. since I had left M&A I just selected all answers to be B

How many of the 6 answers do you feel the correct answer was ‘B’

Make me feel good..!!

105*35/78 (share of aquirer)=78

105*35/47 (share of aquirer)=78

Wait a minute - I thought they said that these calculations would be based on pre-merger market values! Doesn’t that mean you don’t factor in dilution?? Was that just smoke and mirrors?

Kwekoolio Wrote:
——————————————————-
> Wait a minute - I thought they said that these
> calculations would be based on pre-merger market
> values! Doesn’t that mean you don’t factor in
> dilution?? Was that just smoke and mirrors?

my thoughts, too.

it was a no brainer for me, i just looked for the too anwers that combined to 105. other then the 0 - 105 combo, the 78 - 27 was the other, hence picked (pure guess) 78 - 27

Kwekoolio Wrote:
——————————————————-
> Wait a minute - I thought they said that these
> calculations would be based on pre-merger market
> values! Doesn’t that mean you don’t factor in
> dilution?? Was that just smoke and mirrors?

that is you assume that prices don’t change

so that would be 105, 0? such effing ambiguos wording

It did say pre-merger a few times in the questions. That is why I felt a little surprise coz I was ready to calculate the price for the new firm.

Get over there...

is there an answer like this:

Acquirer’s stock is overvalued compared to the target?

lxwqh

lxwqh Wrote:
——————————————————-
> is there an answer like this:
>
> Acquirer’s stock is overvalued compared to the
> target?

That’s what I put