The Glass Works has a market value of $311,000.Creative Pottery has 25,000 shares of stock outstanding at a price per share of $40.Creative Pottery is acquiring The Glass Works in exchange for 8,000 shares of Creative Pottery stock.The merger is expected to create $25,000 of synergy.What will be value received by The Glass Works shareholders?
A)$320,000
B)$324,608
C)$323,879
D)$319,600
E)$325,701

Question

Quizplus · Accepted Answer

Number of post-merger shares = 25,000 + 8,000 = 33,000 sharesV_AB = (25,000 × $40)+ $311,000 + $25,000 = $1,336,000Value received by The Glass Works shareholders = ($1,336,000/33,000)× 8,000 = $323,879

The Glass Works Has a Market Value of $311,000