Milner - Poudre
Milner Manufacturing plans to acquire Poudre Chemicals, by giving Poudre shareholders 1.75 shares of Milner stock per share of Poudre. There are 2 million shares of Poudre Chemicals outstanding, with a pre-merger-offer price of $25 per share, and Milner’s pre-offer stock price is $16.50.

-What is the value of the transaction at the time of the offer for Milner Manufacturing?

Question

Milner - Poudre
Milner Manufacturing plans to acquire Poudre Chemicals, by giving Poudre shareholders 1.75 shares of Milner stock per share of Poudre. There are 2 million shares of Poudre Chemicals outstanding, with a pre-merger-offer price of $25 per share, and Milner’s pre-offer stock price is $16.50.

-What is the value of the transaction at the time of the offer for Milner Manufacturing?

Quizplus · Accepted Answer

Milner is offering 1.75 shares of its stock for each share of Poudre. Poudre has 2 million shares outstanding, so Milner will issue 1.75 x 2 million = 3.5 million new shares to Poudre shareholders.

At the pre-offer stock price of $16.50, the value of the 3.5 million shares Milner will issue is:

3.5 million x $16.50 = $57,750,000

Therefore, the value of the transaction at the time of the offer is $57,750,000.

Milner - Poudre Milner Manufacturing Plans to Acquire Poudre Chemicals, by Giving Poudre