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Assume that Healthcare Associates was fairly valued before the acquisition. American Health Products had 100 million shares outstanding at $22.83 per share, before the acquisition. If American Health Products paid a premium (over the market price) of $800 million for Healthcare Associates, what would you expect will happen to American Health Product’s stock price on the announcement?

a. Increase because of the expected synergy benefits

b. Decrease because the AHP overpaid for HA

c. Increase because AHP pays less than they gain from synergy benefits d. Not enough information.

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Financial Management, Finance

Category:- Financial Management
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