Rudy's and Blackstone are all-equity firms.Rudy's has 1,200 shares outstanding at a market price of $36 a share.Blackstone has 2,500 shares outstanding at a price of $38 a share.Blackstone is acquiring Rudy's for $48,000 in cash.What is the merger premium per share?

Question

Quizplus · Accepted Answer

The merger premium per share is calculated as the difference between the offer price per share and the market price per share of Rudy's. The offer price per share is $48,000 / 1,200 shares = $40. The market price per share is $36. Therefore, the merger premium per share is $40 - $36 = $4.00.

Rudy's and Blackstone Are All-Equity Firms