Company A is planning to acquire Company B by means of a cash offer.

150Company A (stand-alone): 250mCompany B (stand-alone): 125mCombined group: 400mIncrease in value available to A’s shareholders from doing the deal:Gain=400−250=150 million\text{Gain} = 400 - 250 = 150 \text{ million}Gain=400−250=150 million If A pays price PPP for B, A’s net gain = 150−P150 - P150−P.To ensure A’s shareholders are no worse off, 150−P≥0⇒P≤150150 - P \ge 0 \Rightarrow P \le 150150−P≥0⇒P≤150.So the maximum price A should offer is:Answer Q33: $150 million-Exhibit (54cae22f-961a-427a-8ad1-5d95bad9c7cf)-