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What is the value of of the combined firm

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Barrison is investigating the possible acquisition of Soulmaster. The two firms have the following basic data:

                                              Barrison                          Soulmaster

Number of shares                3,000,000                   1,200,000
Current stock price               $75.00                         $25.00

The combined firm will result in a synergy gains of $15m.

Problem a. What is the value of of the combined firm?

Problem b. What is the NPV of acquisition if Barrison pays $30 in cash for each share of Soulmaster?

Problem c. What is the NPV of the acquisition if Barrison offers one share of Barrison for every two shares of Soulmaster?

Reference no: EM132956098

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