Question

Ginormous Oil entered into an agreement to purchase all of the outstanding shares of Slick Company for $60 per share. The number of outstanding shares at the time of the announcement was 82 million. The book value of liabilities on the balance sheet of Slick Co. was $1.46 billion. Immediately prior to the Ginormous Oil bid, the shares of Slick Co. traded at $33 per share. What value did Ginormous Oil place on the control of Slick Co.?

Answer 1

Answer:

the cost of acquisition  $6.38 BILLION

Explanation:

GIVEN DATA:

Slick company share $60/ share

number of share is 82 million

book value of liabilities is $1.46

The value of all assets obtained  is the cost of the acquisition to Ginormous's shareholders and it is given as

= Total value of equity acquired + Book value of  liabilities

Hence, the cost of acquisition  

=$( 60\times 82\ million\ shares) + 1.46\ billion = 4.92 Billion + 1.46 Billion = 6.38 Billion$