Respuesta :
Answer:
The answer is "Share offer is better".
Explanation:
Firstly Computing the value of the combined company:
The merger value = the market value of the B company + the market value of the T + synergically advantages
= shares issued * share price of company B + outstanding shares * price per share of company T + benefits for synergies
[tex]=4,600 \times \$40+1,000\times \$14+\$8,800\\\\=\$206,800\\\\[/tex]
Number of new shares which have been created following the merger = the number of shares in the T *exchange ratio
[tex]=1000 \times \frac{1}{2}\\\\=500 \ shares\\\\[/tex]
The percentage price of the fusion company = the value of the fusion company /the share value of the fusion company
The per-share price of the combined company[tex]=\frac{\$206,800}{4,600+500}=\frac{\$206,800}{5,100}=\$40.55[/tex]
The cash offer value = 16 dollars per share
Stock offer value = price of merged company share /2 [tex]= \frac{\$40.55}{2}=\$20.27 / \ share\\\\[/tex]
Thus, share offer is better
