M&A

CFA Level II
#1

If World Beaters’s board accepts a 1:2 stock exchange offer (1 share of World Beaters per 2 shares of Gadgets N’ More), the takeover premium paid to shareholders of Gadgets N’ More is closest to:

TP = PT - VT where PT = N x PAT for a stock acquisition. PAT = VAT / # of shares VAT = (223 million x $43) + (78 million x $20) + $200 million = $11,349 million. # of shares post-merger = 223 million + 78/2 million = 262 million PAT = $11,349 / 262 = $43.32 PT = 0.5 x 43.32 = 21.66 TP = 21.66 - 20 = $1.66 per share or 1.66/20 = 8.3%

could someone explain how the arrive at .5 wen calculating PT.

this is questin ID 603439

Kaplan schweser CFA L2 QBANK

#2

Your abrievations make it difficult to understand the question… but I would think the .5 has to do with the first sentence in the question: “1:2 stock exchange offer”