Solve the new share price of big corp after the acquisit

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Problem 1: Big Corp is planning to fully acquire Small Corp. Big Corp currently has 10 million shares outstanding with a share price of $50 and total outstanding debt of $100 million (no excess cash). Small Corp currently has 5 million shares outstanding with a share price of $30 and total outstanding debt of $50 million (no excess cash). Big Corp plans a stock swap and will offer to exchange each share of Small Corp for 0.8 new shares in Big Corp. Big Corp will assume all outstanding debt of Small Corp. Synergies from the transaction are expected to be $120 million. Calculate the new share price of Big Corp after the acquisition

Reference no: EM132807994

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