Gillison Markets is being acquired by Bakersﬁeld Ltd. for $129,000 worth of Bakersﬁeld Ltd. stock. Bakersﬁeld Ltd. has 7,500 shares of stock outstanding at a price of $54 a share. Gillison Markets
Has 1,500 shares outstanding with a market value of $27 a share. The incremental value of the
Acquisition is $3,700. How many new shares of stock will be issued to complete this acquisition?

Question

Quizplus · Accepted Answer

The incremental value of the acquisition is $3,700. The market value of Gillison Markets is $1,500 shares x $27 a share = $40,500. The value of Bakersﬁeld Ltd. stock issued is $129,000. The incremental value of the acquisition is $129,000 - $40,500 = $88,500. The number of new shares of stock issued is $88,500 / $54 a share = 1,639 shares. The total number of shares of stock outstanding after the acquisition is 7,500 shares + 1,639 shares = 9,139 shares.

Gillison Markets Is Being Acquired by Bakersﬁeld Ltd