Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both

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Consider The Following Premerger Information About A Bidding Firm Firm B And A Target Firm Firm T Assume That Both 1 (381.34 KiB) Viewed 25 times

Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding. Firm B Firm T 1,700 $25 Shares outstanding 5,800 Price per share $55 Firm B has estimated that the value of the synergistic benefits from acquiring Firm T is $8,100. Firm T can be acquired for $27 per share in cash or by exchange of stock wherein B offers one of its share for every two of T's shares. Are the shareholders of Firm T better off with the cash offer or the stock offer? Share offer is better Cash offer is better At what exchange ratio of B shares to T shares would the shareholders in T be indifferent between the two offers? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) X Answer is complete but not entirely correct. Exchange ratio 0.4921