An Acquiring Company Is Considering a Takeover of a Target

question 72

Multiple Choice

An acquiring company is considering a takeover of a target company.The acquiring company has 10 million shares outstanding with $40 per share.The target company has 5 million shares outstanding which sell for $20 per share.If the acquiring company estimates that merger gains will be $20 million, determine what the highest price will be paid per share for the target.

• A)$24
• B)$26
• C)$28
• D)$30

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Definitions:

Carbohydrate

Organic compounds, such as sugars, starches, and cellulose, consisting of carbon, hydrogen, and oxygen, that are an essential source of energy for living organisms.

Lipid

A class of organic compounds that are fatty acids or their derivatives, insoluble in water but soluble in organic solvents, used for energy storage, as structural components of cell membranes, and in signaling.

Nucleic Acid

Macromolecules essential for life, including DNA and RNA, which carry genetic information in cells.

Protein

Large, complex molecules made up of amino acids that perform a vast array of functions within living organisms, including structural, enzymatic, and regulatory roles.