Company A has 50 million outstanding shares at a price of $3. Company B has 30 million outstanding shares at a price of
Posted: Sun Jul 03, 2022 1:31 pm
Company A has 50 million outstanding shares at a price of$3. Company B has 30 million outstanding
shares at a price of $2. A proposed merger between themseems likely to increase the standard deviation
of their equity returns from 30% individually to 50%combined. This merger is expected to generate an
operating synergy of $50 million. What would you expect themarket value of the combined company to
be after the merger? Assume the CAPM assumptions hold.Explain carefully
shares at a price of $2. A proposed merger between themseems likely to increase the standard deviation
of their equity returns from 30% individually to 50%combined. This merger is expected to generate an
operating synergy of $50 million. What would you expect themarket value of the combined company to
be after the merger? Assume the CAPM assumptions hold.Explain carefully