Exercise 3.) M&A Consider the following information for two all-equity firms, Firm Attrex and Firm Maliwan: Attrex estim
Posted: Tue Jan 18, 2022 12:59 pm
Exercise 3.) M&A
Consider the following information for two all-equity firms,
Firm Attrex and Firm Maliwan:
Attrex estimates that the value of the synergistic benefit from
acquiring Maliwan is yearly positive Cash Flow of $1,085,000 in
perpetuity. Maliwan has indicated that it would accept a cash
purchase offer of $525.715 per share. Attrex is thinking about
offering 38% of their shares in exchange. How should Attrex
proceed?
Exercise 4.) WACC
The total book value of Attrex’s equity is $192 million, and
book value per share is $20. The stock has a market-to-book ratio
of 1.5, and the cost of equity is 12%. The firm’s bonds have a
face value of $25 million and sell at a price of 108% of face
value. The yield to maturity on the bonds is 4.9%, and the firm’s
tax rate is 25%. Find the company’s WACC.
Consider the following information for two all-equity firms,
Firm Attrex and Firm Maliwan:
Attrex estimates that the value of the synergistic benefit from
acquiring Maliwan is yearly positive Cash Flow of $1,085,000 in
perpetuity. Maliwan has indicated that it would accept a cash
purchase offer of $525.715 per share. Attrex is thinking about
offering 38% of their shares in exchange. How should Attrex
proceed?
Exercise 4.) WACC
The total book value of Attrex’s equity is $192 million, and
book value per share is $20. The stock has a market-to-book ratio
of 1.5, and the cost of equity is 12%. The firm’s bonds have a
face value of $25 million and sell at a price of 108% of face
value. The yield to maturity on the bonds is 4.9%, and the firm’s
tax rate is 25%. Find the company’s WACC.