Shareholders of the two companies if the acquisition

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Sanyon is considering the acquisition of Bacer in a share for share transaction in which the acquirer would pay $40 for each share of target’s common stock. Right now, Sanyon’s stock price is $50, and the target share price is $25. based on your own estimates, the exchange ratio should be 0.6. Assume that 0.6 is the fair ratio, but Sanyon goes forward with their offer (as in question 3). Which of the following will happen to the shareholders of the two companies if the acquisition is complete?

a. There is wealth transfer from acquirer shareholders to target shareholders.

b. There is wealth transfer from target shareholders to acquirer shareholders.

c. There is no wealth transfer between acquirer and target shareholders.

d. More information is needed.

Reference no: EM131900607

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