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What is the new share price of Big Corp after acquisition

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Question - Big Corp is planning to fully acquire Small Corp. Big Corp currently has 200 million shares outstanding with a share price of $15 and total outstanding debt of $1,000 million (no excess cash). Small Corp currently has 100 million shares outstanding with a share price of $20 and total outstanding debt of $400 million (no excess cash). Big Corp plans an all cash offer and will offer $23 per share of Small Corp. The transaction will be financed with a new bank loan and Big Corp will assume all outstanding debt of Small Corp. Synergies from the transaction are expected to be $700 million. What is the new share price of Big Corp after the acquisition?

I. $23

II. $35

III. $15

IV. $17

V. $20

Reference no: EM132780999

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