Wilson's has 6,000 shares of stock outstanding at a market price per share of $19.Neilsen's has 22,000 shares outstanding that sell for $33 a share.By merging,$11,000 of synergy can be created.Neilsen's is acquiring Wilson's for $115,005 worth of Neilsen stock.What is the postmerger value per share?

Question

Quizplus · Accepted Answer

Number of shares needed for the acquisition = $115,005 / $33 = 3,485 shares Number of postmerger shares = 22,000 + 3,485 = 25,485 shares V_AB = (6,000 × $19)+ (22,000 × $33)+ $11,000 = $851,000 Postmerger share value = $851,000 / 25,485 = $33.39

Wilson's Has 6,000 Shares of Stock Outstanding at a Market