Ape has 2,500 shares outstanding at GH¢10 per share. Bee has 1,250 shares outstanding at GH¢5 per share. Ape estimates that the value of synergistic benefit from acquiring Bee is GH¢500. Bee has indicated that it would accept a cash purchase offer of GH¢6.50 per share.
Required:
Identify whether Ape should proceed with the merger. (5 marks)
View Solution
At GH¢6.50 per share Bee is not an attractive merger partner.