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What is the value of the shares offered to acquiree from acquirer where share for share exchange is offered as consideration on acquisition?
Is it the value of an acquirer share pre aquisition or the value of a share in combined company which may include a value for synergy ?
Are there different circumstances where each applies?
Thanks to anyone who can help.
hello mate.
The logic is in a share for share exchange the share price of the combined company is given for the shares of the target company..So i guess in your question yes it is the shares of the combined company. But in a question in the kit, the examiner onced used the share price of the acquiring company before the acquisition which to me dosent make sense.Think of it, share for share, give me the shares you have now, i give you share of the combined company then u become part of the combined company, a share for share.
Because whats the logic in giving a share for a share that will be no more cuz after the acquisition, there will be no acquiring company, itl be just the combined company which the target company shareholders will be.
Concluding, this is financial management, advanced for that matter, its all about explaining your assumptions on the paper. The examiner might argue differently and he might be right.Its all about stating your assumptions
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