A Competent Merger Analysis Calculates the Maximum Per Share Price

question 14

Multiple Choice

A competent merger analysis calculates the maximum per share price that should be paid for an acquisition as:

• A)the pre-merger market price plus the per share value of synergies.
• B)the NPV of the incremental cash flows coming from the acquisition divided by the number of shares of the target's stock that are outstanding.
• C)the targets terminal value.
• D)the NPV of the target's terminal value divided by the number of share tendered.

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Definitions:

Introns

Non-coding sequences of DNA within a gene that are removed during mRNA processing, leaving only the exons to be translated into protein.

Transgenic Organisms

Organisms whose genomes have been artificially changed by the introduction of a gene from a different species, using techniques of genetic engineering.

Genetically Engineered

Organisms that have had their genetic material altered in a way that does not occur naturally through mating and/or natural recombination.

E. Coli

Escherichia coli, a commonly occurring bacterium in the intestines of warm-blooded organisms, some strains of which can cause food poisoning.