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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Discount Books, a Canadian bookseller, has announced its intended acquisition of Premier Marketing Corporation, a small marketing company specializing in print media. In a press release, Discount Books outlines the terms of the merger, which specify that Premier Marketing’s shareholders will each receive 0.90 shares of Discount Books for every share of Premier Marketing owned. Premier Marketing has 1 million shares outstanding. On the day of the merger announcement, Discount Books’ stock closed at C$20.00 and Premier Marketing’s stock closed at C$15.00. Catherine Willis is an individual investor who owns 500 shares of Premier Marketing, currently worth C$7,500 (500 × C$15.00).
1. Based on the current share prices, what is the cost of the acquisition for Discount Books?
2. How many shares of Discount Books will Catherine Willis receive, and what is the value of those shares (based on current share prices)?
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