Acquiring Corp Agrees to Buy 100% of the Outstanding Shares

question 110

Multiple Choice

Acquiring Corp agrees to buy 100% of the outstanding shares of Target Corp in a share for share exchange. How would Acquiring Corp determine how many new share of its stock it would have to issue?

• A) Multiply the purchase price premium paid for Target's stock by the number of shares of target stock outstanding.
• B) Multiply the share exchange ratio by the number of Acquirer shares outstanding.
• C) Add the number of Acquirer and Target shares outstanding
• D) Multiply the share exchange ratio by the number of Target shares outstanding.
• E) Divide the share exchange ratio by the purchase price premium

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