What exchange ratio could be offered

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The Canadian Tire Corporation has announced plans to acquire Mississauga Tire Corporation. Canadian Tire is trading for $16 per share and Mississauga Tire is trading for $14 per share, implying a premerger value of Mississauga Tire of approximately $180 million. If the projected synergies are $30 million, what is the maximum exchange ratio Canadian Tire could offer in a stock swap?If Canadian Tire wants to absorb all of the projected synergies what exchange ratio should they offer? What exchange ratio could be offered so both Canadian Tire and Mississauga Tire share the projected synergies equally?

Reference no: EM133000345

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