1. for (b) in the initial offer ( five shares in Louieed Co for three shares in Tidded Co.....)
i really do not understand why we multiply this 5/3 to calculate Louieed Co's share price.
Is it because Louieed Co acquires Tidded Co, Louieed Co will have higher number of outstanding shares from the acquisition while for Tidded Co will have Louieed Co's share price x 5/3 ????
Does this mean ( for example) whenever company A acquires company B and when we calculate PE ratio of company B, we calculate the share price of company B based on the share price of A with the offer ???
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LOUIEED CO (MAR / JUN 16)
7y ago#1The answer does not multiply by 5/3 to get Louieeds share price!!
If someone owes 3 shares in Tiddles, the get 5 shares in Louieed that are worth 5 x $12.19.
This would be the value placed on 3 shares in Tiddles, therefore the value for 1 shares is (5 x $12.19) / 3.
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