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Author Question: MegaToy Inc is considering acquiring Action Figures Inc, both publicly traded firms in the toy ... (Read 87 times)

Alainaaa8

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on: Jul 11, 2018
MegaToy Inc is considering acquiring Action Figures Inc, both publicly traded firms in the toy industry. Action Figures is currently trading at 18 per share and has 15 million shares outstanding.
 
  The executive team at MegaToy believes that the present value of potential synergies is 70 million if the firms combine. What is the highest bid price per share that MegaToy should consider paying for Action Figure shares? What is the largest percentage premium over the current share price MegaToy would be willing to pay?

Question 2

A spider is an example of a broad market exchange-traded fund.
 
  Indicate whether the statement is true or false


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k2629

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Reply #1 on: Jul 11, 2018
Answer to Question 1

The value of Action Figures to MegaToy = 18/share  15,000,000 shares + 70,000,000 = 340,000,000. The maximum value per share is Value/the number of shares = 340,000,000/15,000,000 = 22.67. This is a (22.67 - 18.00 )/(18.00 ) = 25.93 premium over the current market price.

Answer to Question 2

TRUE


Alainaaa8

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Reply 2 on: Jul 11, 2018
Thanks for the timely response, appreciate it

Dominic

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Reply 3 on: Yesterday
:D TYSM

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