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Mergers & Acquisitions - How to calculate stock buyout price?
December 9, 2011 at
08:29 AM
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Last Edited by im2bz2p December 9, 2011 at 08:45 AM
Hello all,
Does anyone know how to calculate a stock's close price if they are acquired by another company? This question is best illustrated by an example:
Google (GOOG) had announced on Nov. 17 to buy Motorola Mobility Holdings (MMI) for $12.5 billion cash.
It was mentioned that the price per share was $40, but I don't understand how they calculated this.
I thought the calculation would be $12,500,000,000/299,040,000 (number of shares outstanding: http://finance.yahoo.c om/q/ks?s=M...Statis tics) = $41.80
Can anyone explain? Sometimes in the buyout news articles that I read, they only list the buyout amount (in this case $12.5 billion) and not the price per share, so I was curious how to calculate this. Maybe they are getting the "number of shares outstanding" from a different source.
I appreciate the help in advance,
~ Im2bz2p
Does anyone know how to calculate a stock's close price if they are acquired by another company? This question is best illustrated by an example:
Google (GOOG) had announced on Nov. 17 to buy Motorola Mobility Holdings (MMI) for $12.5 billion cash.
It was mentioned that the price per share was $40, but I don't understand how they calculated this.
I thought the calculation would be $12,500,000,000/299,040,000 (number of shares outstanding: http://finance.yahoo.c
Can anyone explain? Sometimes in the buyout news articles that I read, they only list the buyout amount (in this case $12.5 billion) and not the price per share, so I was curious how to calculate this. Maybe they are getting the "number of shares outstanding" from a different source.
I appreciate the help in advance,
~ Im2bz2p
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In this case, you may need to take into account treasury shares (shares repurchased or owned by MMI). Google would proably also need to purchase those shares. Outstanding shares are those held by investors and not the company itself. So the total of treasury + outstanding shares give total issued shares.
in-the-money options (i.e. options where the exercise price < per share merger consideration)
restricted stock grants to executives
change of control payments
transaction fees (government, lawyers, accountants, i-bankers, etc.)
holdbacks / escrowed money
Just to name a few. If you are interested in seeing specifics for this transaction, visit http://www.sec.gov and search for filings of MMI and GOOG. All of this has to be publicly disclosed.
Does anyone know how to calculate a stock's close price if they are acquired by another company? This question is best illustrated by an example:
Google (GOOG) had announced on Nov. 17 to buy Motorola Mobility Holdings (MMI) for $12.5 billion cash.
It was mentioned that the price per share was $40, but I don't understand how they calculated this.
I thought the calculation would be $12,500,000,000/299,040,000 (number of shares outstanding: http://finance.yahoo.c
Can anyone explain? Sometimes in the buyout news articles that I read, they only list the buyout amount (in this case $12.5 billion) and not the price per share, so I was curious how to calculate this. Maybe they are getting the "number of shares outstanding" from a different source.
I appreciate the help in advance,
~ Im2bz2p
There seems to many components these "per share" values. I agree with jonny, that the annoucement are very broad.
For example, they stated the buyout to be 12.5 billion, but in actuality if you read the SEC documents.. it's stated at $12,539,173,804
Anyway, I guess it's easier to just google price per share for an acquired stock than trying to calculate it all yourself via SEC documents. lol.
~ Im2bz2p
I would guess that if Google's deal for MMI falls through, you could see MMI lose $5/share overnight, causing you to lose your shirt.