Lasersock shareholders receive after the acquisition

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Reference no: EM131352544

Glimmering Inc. is planning to acquire Lasserocks. After the acquisition the expected dividend amount will increase by $1,300,000 every year in perpetuity. At the moment Glimmering's shares trade for $160 and there are 980,000 shares outstanding. Lasserock's shares trade for $55 each and there are 3,500,000 shares outstanding. The boards of directors of the two companies agree to share the increase in equity value in the following way: 30% to Glimmering shareholders and 70% to the shareholders of Laserocks. The acquisition will be paid with newly issued shares of Glimmering. Finally, the post-acquisition return on equity will be 14%. How many shares of Glimmering will Lasersock's shareholders receive after the acquisition?

Reference no: EM131352544

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