In January 2020, A Co. announced plans to acquire T Co. After a careful valuation process,...

In January 2020, A Co. announced plans to acquire T Co. After a careful valuation process, the directors of A Co. have projected that the present value of the takeover synergies will be US$1.52 million.

In addition, the following information is available.

A Co. and T Co. price per share are US$25 and US$30, respectively.
T Co. has 1.5 million shares outstanding.

Use this information to answer the following questions related to a A Co.'s financially feasible offer. Use 2 decimal places to express your answer.

What is the maximum tender offer, A Co. should be willing to make for T Co.? Answer: maximum tender offer will be US$ ______million.
What is the maximum premium (as a fraction of MC_T), A Co. should be willing to offer for T Co.? Answer: maximum premium (as a fraction of MC_T) will be _____%.
What is the maximum cash offer per T Co share, A Co. should be willing to make for T Co.? Answer: maximum cash offer per T Co shares will be US$ ______.
What is the maximum exchange ratio (N*/N_T), A Co. could offer in a stock swap to T Co.? Answer: maximum exchange ratio will be ______.

Expert Solution

jeff jeffy answered 1 year ago

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