Exam 26: Mergers and Acquisitions

Hanover Tires is being acquired by Better Tires for $85,000 worth of Better Tires stock. Hanover Tires has 2,600 shares of stock outstanding at a price of $32 a share. Better Tires has 7,500 shares outstanding with a market value of $29 a share. The incremental value of the acquisition is $2,200. How many new shares of stock will be issued to complete this acquisition?

Pearl, Inc. has offered $218 million cash for all of the common stock in Jam Corporation. Based on recent market information, Jam is worth $215 million as an independent operation. If the merger makes economic sense for Pearl, what is the minimum estimated value of the synergistic benefits from the merger?

The Daily News published an ad today wherein it announced its desire to purchase shares of a competing newspaper, the Oil Town Gossip. Which one of the following terms is best described by this announcement?

If an acquisition does not create value and the market is smart, then the:

Which one of the following generally has a flip-in provision that significantly increases the cost to a shareholder who is attempting to gain control over a firm?

An automaker recently acquired a windshield manufacturer. Which type of an acquisition was this?

News Express has 26,200 shares outstanding at a market price of $33.30 a share. Nu-News has 15,000 shares outstanding at a price of $54 a share. The News Express is acquiring Nu-News. Both firms are all-equity financed. The incremental value of the acquisition is $2,500. What is the value of Nu-News to News Express?

In a tax-free acquisition, the shareholders of the target firm:

Which one of the following does not represent a potential tax gain from an acquisition?

All of the following are related to a takeover except a:

If a merger creates synergy, then the:

Which one of these statements is false?

The shareholders in the acquiring firm may not realize any significant gains from an acquisition. Which one of the following has not been suggested as a reason for this lack of gain?

Which one of the following best defines synergy given the following? VA = Value of Firm A VB = Value of Firm B VAB = Value of merged Firm AB

Assume the shareholders of a target firm benefit from being acquired in a stock transaction. Given this, these shareholders are most apt to realize the largest benefit if the:

A proposed acquisition is most apt to create synergy by:

Aardvark Enterprises has agreed to be acquired by Lawson Products in exchange for $30,000 worth of Lawson Products stock. Lawson has 3,000 shares of stock outstanding at a price of $28 a share. Aardvark has 1,100 shares outstanding with a market value of $23 a share. The incremental value of the acquisition is $1,400. What is the value of Lawson Products after the merger?

Moore Industries has agreed to be acquired by Scott Enterprises for 800 shares of Scott Enterprises stock. Scott Enterprises currently has 7,500 shares of stock outstanding at a price of $28 a share. Moore Industries has 1,800 shares outstanding at a price of $12 a share. The incremental value of the acquisition is $1,100. What is the value per share of Scott Enterprises stock after the acquisition?

Glendale Marine is being acquired by Inland Motors for $60,000 worth of Inland Motors stock. Inland Motors has 8,200 shares of stock outstanding at a price of $51 a share. Glendale Marine has 1,600 shares outstanding with a market value of $36 a share. The incremental value of the acquisition is $3,200. What is the total number of shares in the new firm?

The value of a target firm to the acquiring firm is equal to the: