KRochelli Wrote: ------------------------------------------------------- > good point sbugrad89—i can’t remember how the > question was worded. (ie. if they ended up > getting 105 synergies after the shares were > exchanged) > > i know the first is definitely 78. i’m not too sure. The second is def 0 - the thing is the question said on “pre merger values” specifically so i’m not sure they wanted the dilution effect included - the second part did (post merger) but we won’t know until later - the wording sucked because if you could work the second one out you obv could have worked the first out (if they explained the question better)
the gain to the acquirer = synergies - the preium paid for the target not the cost of the target look it up in the book
E-Bone Wrote: ------------------------------------------------------- > the gain to the acquirer = synergies - the preium > paid for the target > > not the cost of the target > > look it up in the book i know how to work it out Bone so I don’t need to look it up. The question was worded funny - hence loads of people have diff answers for an easy question.
thats correct. good job you actually memroized the numbers!
The pre-merger is the confusing point. I still can’t figure out why they put it there twice for both questions. If they do not put there, most people will consider the dilution (after merg price), but when they put there, it still seems you should calculate that way…guess we can’t really put this thing to rest for now…
the way I see it this is very simple. the post merger price is going to be 47.5 bucks or so. to get the share price back to 50 bucks (premerger acquirer price) you need 105 in synergies to the combined company.
Well to clarify: The pre-merger statement is related to the calculation of VAT. In both questions you need to calc this value after the combination. VAT = VA + VT + S – C You calc that using the pre-merger mkt value per share as an accurate valuation of each individual company, VA & VT. So the VAT is then simply the sum of the two companies + any synergies that result - any cash spent. The same ‘using pre-merger value’ wording is in the schweser book 6, mock 2pm, question 106.
according to slouiscar 2 more points to me! I just unified the companies using the relation described in the case. when the test ended I kept in silence listening two guys talking near me. they calculated if the aquisition was the inverse. Then I became a little insecure about my answer. thanks god I put the right answer.