- 34 5 Benefit And Cost Of Merger As The Financial Manager Of Multibex Company You Are Investigat Ing The Acquisition Of 1 (50.08 KiB) Viewed 30 times
34.5 Benefit and Cost of Merger As the financial manager of Multibex Company you are investigat- ing the acquisition of
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34.5 Benefit and Cost of Merger As the financial manager of Multibex Company you are investigat- ing the acquisition of
34.5 Benefit and Cost of Merger As the financial manager of Multibex Company you are investigat- ing the acquisition of Unibex Company. The following facts are given: Multibex Company Unibex Company Earning per share 6.00 2.00 Dividend per share *3.00 * 1.20 Price per share * 45.00 12.00 Number of shares 5,000,000 2,000,000 Investors currently expect the dividends and earnings of Unibex to grow at a steady rate of 5 percent. After acquisition this growth rate would increase to 7 percent without any additional investment. Required: (a) What is the benefit of this acquisition? (b) What is the cost of this acquisition to Multibex Company if it (i) pays ? 15 per share cash compensation to Unibex Company and (ii) offers one share for every three shares of Unibex Company?
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