Homework Answers
Pre-merger Value of BuyCo = 41 * 18000000 = 738000000
Pre-merger Value of SellCo = 17 * 10000000 = 170000000
Value of Synergy = 47000000
SellCo's share in Synergy = 47000000 * 0.6 = 28200000
BuyCo's Share in Synergy = 47000000 - 28200000 = 18800000
Post-merger Value of BuyCo = 738000000 + 18800000 = 756800000
Post-merger Value of SellCo = 170000000 + 28200000 = 198200000
Value per share of Buyco = Total Value / Number of shares
= 756800000 / 18000000 = 42.0444444444444
Number of shares to be issued to SellCo = Value of SellCo / Value per share
= 198200000 / 42.0444444444444
= 4714059.19661734 or 4714060 Shares.
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