What will be the share price of the merged company

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Jael is a hospitality company that considers acquiring Sisera Inc. Jael share market price is $50 and there are 1M of Jael shares outstanding. Sisera has 0.1M shares outstanding worth $150 each. If Jael acquires Sisera, then the resulting synergy will amount to $10M.

a) Suppose Jael offers to exchange every Sisera’s share for four shares in the merged company. What will be the share price of the merged company?

b) What will be the total benefit for the existing shareholders of Jael?

c) What about the existing shareholders of Sisera?

d) Suppose Jael offers to exchange every Sisera’s share for $200 in cash. What will be the share price of the merged company?

e) What will be the total benefit for the existing shareholders of Jael?

f) What about the existing shareholders of Sisera?

Reference no: EM132052913

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