JLM has 7,400 shares of stock outstanding at a market price per share of $18.Hi-Tek has 36,000 shares outstanding that sell for $45 a share.By merging,$5,000 of synergy can be created.Hi-Tek is acquiring JLM for $135,000 worth of Hi-Tek stock.What is the postmerger value per share?

Question

Quizplus · Accepted Answer

Number of shares needed for the acquisition = $135,000 / $45 = 3,000 shares Number of postmerger shares = 36,000 + 3,000 = 39,000 shares V_AB = (7,400 × $18)+ (36,000 × $45)+ $5,000 = $1,758,200 Postmerger share value = $1,758,200 / 39,000 = $45.08

JLM Has 7,400 Shares of Stock Outstanding at a Market