Raider to target shareholders

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The balance sheet for the Raider Company shows Total assets of $12,900 financed by $3,000 of Debt and $9,900 of Stockholders' equity. For the Target Company Total assets of $4,900 are financed by $1,800 ofDebt and $3,100 of Stockholders' equity. The Raider Company plans to takeover the Target Company. The Raider Company has 800 common shares outstanding, their equity price-to-book ratio is 4.70, and their price-to-earnings ratio is 32.3. The Target Company has 620 common shares outstanding, their equity price-to-book ratio is 1.40, and their price-to-earnings ratio is 13.8. The Raider Company offers 2 share(s) of Raider stock to Target shareholders that tender 11 Target shares (the exchange ratio is 0.181818; assume fractional shares can be exchanged). Suppose tax effects and synergistic gains and losses equal zero; that is, accumulated sales, costs, and profits remain the same. After the Raider takes control of all Target shares, what is the total transfer of wealth from Raider to Target shareholders?

Reference no: EM131082582

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