Cavalier Enterprises has agreed to be acquired by The Fox Hunt for $65,000 worth of The Fox Hunt stock. The Fox Hunt currently has 3,300 shares of stock outstanding at a price of $32 a share. Cavalier Enterprises has 2,400 shares outstanding at a price of $26 a share. The incremental value of the acquisition is $2,800. What is the value per share of The Fox Hunt stock after the acquisition?

Question

Quizplus · Accepted Answer

The value of The Fox Hunt before the acquisition is 3,300 shares * $32/share = $105,600. The value of Cavalier Enterprises is $65,000, as given by the acquisition price. The total combined value after the acquisition is $105,600 + $65,000 + $2,800 (incremental value) = $173,400. The total number of shares after the acquisition is 3,300 (The Fox Hunt) + ($65,000 / $32) (new shares issued for the acquisition) = 3,300 + 2,031.25 = 5,331.25 shares. Therefore, the value per share after the acquisition is $173,400 / 5,331.25 = $32.54.

Cavalier Enterprises Has Agreed to Be Acquired by the Fox