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What is anheuser stock price after the acquisition for cash

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Reference no: EM132828159

Anheuser LLC wants to acquire Busch LLC. Anheuser expects the acquisition to increase its cash flow from assets by $18 million per year forever, in addition to the cash flow from assets from Busch. The relevant discount rate for the incremental cash flows is 14%.

Both firms are purely equity financed. Anheuser has 600 million shares outstanding and a market value (of equity and assets) of $800 million, while Busch has a market value of $200 million.

Anheuser has to decide if they should offer $277 million in cash or 31% of its stock for Busch. Ignore tax effects.

a) What is Anheuser's stock price after the acquisition for cash?

b) What is Anheuser's stock price after the acquisition for stock?

Reference no: EM132828159

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