Question
In: Finance
VS is contemplating the acquisition of TG. Each company has 1 million shares outstanding You are given...
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VS is contemplating the acquisition of TG. Each company has 1 million shares outstanding |
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You are given the following information: |
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Value of VS alone (in million) |
107 |
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Value of TG alone (in million) |
56 |
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From merger, the estimated reduction in after-tax R&D costs per year in perpetuity (in million) |
3 |
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VS is considering a cash offer to TG (in million): |
72.8 |
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Cost of capital |
0.11 |
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Tax-rate |
0.3 |
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What would be the gain from the merger? |
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Now suppose that instead of making a cash offer, VS cosiders offering TG shareholders a 50% holding in VS. |
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What is the value of stock in the merged company held by the original TG shareholders? |
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What is the cost of the stock alternative? |
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vWhat is the NPV under the stock offer? |
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Solutions
Expert Solution
SEE THE IMAGE. ANY DOUBTS,
FEEL FREE TO ASK. THUMBS UP PLEASE
jeff jeffy answered 1 year agoRelated Solutions
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