Free lecture on share-for-share exchange calculation?

No, I am sorry but there is no lecture on share-for-share exchange because it doesn’t really need one.

The examiners answer to this question makes it look more complicated than it actually is (and makes it look as though you need a special ‘rule’, which is not the case!).

Before the acquisition, there are 140M shares in Danton. The new value of Danton is 1920.5M, so Danton’s shareholders need to be given shares in Kerrin with 1920.5/140 = $13.718 for each share in Danton that the currently own.

Before the acquisition there are 375/0.5 = 750M shares in Kerrin. The new value of these shares is 4041.2, so the new value of Kerrin’s shares is 4041.2/750 = $5.388

So for shareholder in Danton to be given $13.71 per share, they need to be given 13.72/5.39 = 2.55 shares in Kerrin for every 1 share they held in Danton (approximately, because of roundings).

Leaving it as this would be quite enough for the exam and would get full marks. It is nicer (but not necessary) not to have decimals in the share offer, and 18 shares for every 7 is the same (apart of roundings (18/7 = 2.57 shares for every 1 shares). But again, leaving it as 2.55 shares for every 1 shares is perfectly OK for the marks 🙂

You are welcome 🙂