Firm B's one million shares of stock currently sell for $12 each, but Firm A is preparing an $18 per share tender offer.Firm A estimates the gain of the merger to be $6 million.What percentage of the merger gains will be captured by B's stockholders?

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Quizplus · Accepted Answer

50.00%The gain from the merger is $6 million. Firm B's stockholders will receive an $18 per share offer, up from the current $12 per share, which is a $6 increase per share. With one million shares, this totals a $6 million gain for Firm B's stockholders, which is exactly the estimated gain from the merger, meaning Firm B's stockholders capture 50% of the merger gains.

Firm B's One Million Shares of Stock Currently Sell for $12