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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.

  1. What is the maximum tender offer, A Co. should be willing to make for T Co.?  Answer: maximum tender offer will be US$ ______million.
  2. What is the maximum premium (as a fraction of MCT), A Co. should be willing to offer for T Co.?  Answer: maximum premium (as a fraction of MCT) will be _____%.
  3. 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$ ______.
  4. What is the maximum exchange ratio (N*/NT), A Co. could offer in a stock swap to T Co.?  Answer: maximum exchange ratio will be ______.

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jeff jeffy answered 2 years ago
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