Sir can you show me how to calculate,
How much share should i offer to acquire target company for share for share exchange in case of 2 situation
(i) offer share in such way that target companies share holder receive 30% premium.
(ii) target companies shareholder receive 55% of additional value created from acquisition are transferred to target companies shareholder
(iii) no benefit or premium is offered
(please explain me this with relevant calculation.Same type of question came in Dec 2018 and in Sep 2019 i couldn't answer this question as i don't no proper way to answer this question)
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Acquisition and mergers (3)
7y ago#1First you have to decide how much shareholders are to receive per existing share.
If they are to get a 30% premium, then it is 30% more than the existing share price of the target company.
If they are to get 55% of the additional value, then the premium over the existing share price is 55% of the additional value, divided by the number of existing shares.
Having calculated the amount they are to get per share, you then calculate how many new shares will be needed to each existing share in order to give them that amount.
If i get decimal figure say 2.5 in answer then what should i do in such case
7y ago#3I assume you are meaning that you get an answer like 2.5 new shares for every 1 old share.
If so, then you can actual leave it as 2.5 for 1, but it looks better if you multiply by 2 and instead write 5 new for every 2 old.
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