If Raider Ltd,the acquirer,has 2 million shares with a market value of $4 each and Sucker Ltd,the target,has 1 million shares with a market value of $1.50 each,what is the perceived benefit per share in Raider Ltd from the takeover if Raider Ltd offers two of its own shares for every one share of Sucker Ltd?

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Quizplus · Accepted Answer

The perceived benefit per share in Raider Ltd from the takeover is $3.25 per share. This is calculated as follows:Market value of Raider Ltd shares = 2 million shares x $4 per share = $8 millionMarket value of Sucker Ltd shares = 1 million shares x $1.50 per share = $1.5 millionTotal market value of shares involved in the takeover = $8 million + $1.5 million = $9.5 millionNumber of Raider Ltd shares offered for each Sucker Ltd share = 2 sharesNumber of Raider Ltd shares issued in the takeover = 1 million shares x 2 shares = 2 million sharesMarket value of Raider Ltd shares issued in the takeover = 2 million shares x $4 per share = $8 millionPerceived benefit per share in Raider Ltd = (Total market value of shares involved in the takeover - Market value of Raider Ltd shares issued in the takeover) / Number of Raider Ltd shares issued in the takeover= ($9.5 million - $8 million) / 2 million shares= $1.5 million / 2 million shares= $0.75 per share

If Raider Ltd,the Acquirer,has 2 Million Shares with a Market