Acquisition of TGT Inc by ACQ Corp


ACQ Corp. is analyzing the possible acquisition of TGT Inc. ACQ estimates the acquisition will increase its total after-tax annual cash flows by $7.6 million indefinitely. The appropriate discount rate for the incremental cash flows is 10 percent. The financial analyst of ACQ has collected the following information:




Pre-merger stock price



Number of shares outstanding

12 million

8 million

ACQ and TGT have agreed on a transaction value of $24 per share for TGT’s stock, but are negotiating methods of payment: an all-cash offer, and a stock exchange offer.

Assuming neither company has debt, calculate the followings:

a) Synergy and takeover premium for both of the methods.

b) NPV for each method.

c) Assume the synergy is re-estimated to be $80million based on the recent market information. What is the maximum cash price per share that could be paid for AWA?

d) Assume the synergy remains to be $80million. Calculate the takeover premium for a cash and stock exchange offer ($6.5 cash per share of TGT plus 0.35 shares of ACQ per share of TGT).


This question belongs to finance and discusses about analysis of possible acquisition of TGT Inc. by ACQ Corp.

Word count: Excel Format


Download Full Solution


  • HWA

    this is a very good website

  • HWA

    I have 50 questions for the same test your page is showing only 28

  • HWA

    hi can you please help or guide me to answer my assignments. thanks

  • HWA

    hi can anyone help or guide me to my assignments. thanks

  • HWA

  • HWA

    This solution is perfect ...thanks

  • HWA

    Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

  • HWA

    Perfect bank of solution. 

  • HWA

    great !

  • HWA
    Paul Brandon-Fritzius

    thanks for the quick response. the solution looks good. :)

  • HWA
    tina Johnson

    thnx for the answer. it was perfect. just the way i wanted it. 

  • HWA

    works fine.