Practice question · True or false
If the synergy from a deal is 40M€ and the acquirer pays a 55M€ premium, the acquisition still creates value for the acquirer’s shareholders.
Hints
- Value to the acquirer is the gain minus what was paid for it.
- Here the premium exceeds the gain.
Show the answer
False
Why
Value to the acquirer = synergy − premium = M€. The target’s shareholders captured the synergy plus 15M€ more.
Practise Mergers and Acquisitions
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