Find the lower bound of X

Assignment Help Accounting Basics

Reference no: EM132216966

Question - Merger and acquisition

Energy-USA plans to acquire Energy-Brazil. It offers X million shares of Energy-USA for all of Energy-Brazil's shares. The exchange rate is R$4.0000/$ around the acquisition.

	P/E ratio	# of Shares	(after-tax) Earnings
Energy-Brazil	20	400 million	R$400 million
Energy-USA	30	250 million	$200 million

(a) Find the lower bound of X (4 decimal places) such that original Energy-Brazil shareholders would agree with the merger (assume the P/E ratio is 30 after the merger)?

(b) Find the upper bound of X (4 decimal places) such that original Energy-USA shareholders would benefit from the merger (assume the P/E ratio is 30 after the merger)?

(c) If the merger adds no extra value to both original firms, find P/E (after the merger), the value of X (4 decimal places), and the exchange ratio (4 decimal places) of the merger per Energy-Brazil share in this scenario.

(d) If X=90, and P/E=30 after the merger, calculate the value ($ million) of the synergies created by the merger and the stock return (%) of Energy-USA to the original Energy-USA shareholders.

Reference no: EM132216966

Questions Cloud

Impacts ubers profits-favorably or unfavorably : Pick one force and describe how you believe it impacts Ubers’s profits, favorably or unfavorably.

Sketch the bifurcation diagram : Show that the curve of saddle-node bifurcations in the (µ, ?) plane is 9µ2 = 2v(3?3/2) and plot this curve - Be careful to indicate the stability of any branche

What do you remember most about the time period : Select one time period or situation in which you felt professionally happy, motivated, and fulfilled in your job. What do you remember most.

The firm average inventory be under each alternative : What will the firm’s average inventory be under each alternative? What will be the breakdown of cost for each alternative

Find the lower bound of X : Find the lower bound of X (4 decimal places) such that original Energy-Brazil shareholders would agree with the merger

Population pyramid of a population : How would a Population Pyramid of a population whose birth rate is twice the death rate look like if the observation was made over several generations?

Collective ownership of the means of production : What is the difference between the collective ownership of the means of production and privatized ownership of the means of production

Reflect on one of the most difficult encounters : Reflect on one of the most difficult encounters that you have had with a customer or service professional. What was the issue and how was it resolved?

How aprn provide effective care in end of life management : Choose 1 focal point from each subcategory of practice, education, research and administration and describe how the APRN can provide effective care.

User Account

All Pages