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Firm a Wants to Merge with fiRm B and as an Acquiring

question 55

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Firm A wants to merge with firm B and as an acquiring firm is willing to pay a premium.Firm A's equity is currently worth EUR100 million, firm B's equity is worth EUR20 million.Firm B has 1,000,000 shares outstanding.Synergy gains are estimated to be around 10%.What is the maximum should Firm A offer to pay firm B's shares?


Definitions:

Sherman Act

A landmark federal statute in the U.S. antitrust law prohibiting monopolistic practices and promoting competition.

Restrain Trade

Involves activities or agreements that restrict or limit competition within a market, often considered illegal under antitrust laws.

Antitrust Violations

Illegal activities under antitrust laws that lead to unfair competition, such as price fixing, monopolies, and other practices that significantly reduce market competition.

Sherman Act

A foundational piece of antitrust legislation in the United States, aimed at preventing monopolies and promoting competition.

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