Merger announcement date-market capitalization

Assignment Help Financial Management

Reference no: EM131180427

Merger announcement date: January 7, 2000 Stand-Alone Firms Number of shares Market Cap Premerger Share Price (in billions) (in billions) AOL 72.88 x 2.6 = $189.5 TWX 64.75 x 1.4 = 90.7 Total $280.2 Combined AOL-TWX New AOL shares for TWX stockholders = Exchange ratio x TWX shares = 1.5 x 1.4 billion = 2.1 billion Number of shares Market Cap Postmerger Share Price (in billions) (in billions) “TWX” 72.88 x 2.1 = $153.1 AOL 72.88 x 2.6 = 189.5 Total 4.7billion shares, Total $342.6 billion.The value of AOL on September 10, 2002, was $13.36, and the number of shares outstanding was 4.45 billion. What was the decline in value of AOL from its immediate postmerger market capitalization?

Reference no: EM131180427

Questions Cloud

Analyze the trade-offs between inputs for the productivity : Analyze the advantages and disadvantages of global sourcing versus producing in the U.S. Describe a product or service of a specific low-labor-cost country as an example.

Differences between cash flow and accounting income : Discuss differences between cash flow and accounting income and why it is important to use cash flow in making capital budgeting decisions. How do companies generate ideas for capital projects? Give some examples of capital projects that companies in..

The beginning of each year from their portfolio : Steve and Roslyn are retiring together today and they wish to receive $40,000 of income (in the equivalent of today's dollars) at the beginning of each year from their portfolio. They assume inflation will be 4% and they expect to realize an after ta..

Calculate the payback period for each of projects : Calculate the payback period for each of the following projects without using Excel, then select your project based on the payback period criterion: Project A has a cost of $15,000, returns $4,000 after-tax the first year and this amount increases by..

Merger announcement date-market capitalization : Merger announcement date: January 7, 2000 Stand-Alone Firms Number of shares Market Cap Premerger Share Price (in billions) (in billions) AOL 72.88 x 2.6 = $189.5 TWX 64.75 x 1.4 = 90.7 Total $280.2 Combined AOL-TWX New AOL shares for TWX stockholder..

Study the possibilities in forecasting : A very rough outline(tasks) of the project: data preprocessing, data clustering, classification and visualization, measuring data similarity and dissimilarity from different approaches and study the possibilities in forecasting financial time series ..

What strategies can leaders employ to cultivate tolerance : Evaluate the benefits of a leader who has developed the skill of cross-cultural communication. Explain what knowledge is required for a person to increase his/her understanding of another culture (hint: for example, greetings, customs, or holiday ..

Display and discuss the publications : Have each class member write to two or three trade associations at the beginning of the term to request their lists of publications, and then have each send for some of the publications. Display and discuss the publications.

Find the cash flow from mark-to-market proceeds on contract : The multiplier for a futures contract on the stock-market index is $250. The maturity of the contract is one year, the current level of the index is 700, and the risk-free interest rate is 0.5% per month. The dividend yield on the index is 0.2% per m..

User Account

All Pages