Question

Cassandra's has 6,100 shares outstanding at a market price per share of $24. Adrian's has 3,500 shares outstanding at a market price of $56 a share. Neither firm has any debt. Adrian's is acquiring Cassandra's for $155,000 in cash. The synergy of the acquisition is $22,500. What is the value of Cassandra's to Adrian's?

Answer 1

The value of Cassandra's to Adrian's, including synergies, is $177,500, comprising the cash acquisition amount and the expected synergies from the acquisition.

Step-by-step explanation:

The value of Cassandra's to Adrian's can be determined by the cash consideration paid for the acquisition and the expected synergies from the deal. Adrian's is acquiring Cassandra's for $155,000 in cash. Given the additional synergy value of the acquisition is $22,500, the total value of Cassandra's to Adrian's is the sum of these two amounts, which would be $155,000 + $22,500, equaling $177,500.