We invite you to participate in our Mergers and Acquisitions pop quiz where we showcase a sample question from the Chartered Investment Banking Analyst™ program. Challenge yourself with the question below!

PH Corporation announces that it will acquire Popcorn, Inc. for a combination of $6.00 per share in cash and 2 shares of PH stock for every share of Popcorn stock. There are 10 million shares of Popcorn outstanding. PH stock trades for $13.75 on the day the acquisition is announced, and $13.00 on the day the transaction is completed. What is the purchase price paid by PH for Popcorn?

A. $320 million
B. $335 million
C. $190 million
D. $327.5 million

A. Correct. Calculate the purchase price based on the value of the stock offered at the date the transaction closes. ($6.00 + 2 x $13.00) x 10 million shares.
B. Incorrect. You must calculate the purchase price of the transaction based on the value of the stock offered on the day the transaction closes ($13.00 per share.)
C. Incorrect. You must remember that two shares of PH stock were offered, in addition to the $6.00 in cash offered.
D. Incorrect. Calculate the purchase price based on the value of the stock offered at the date the transaction closes. ($6.00 + 2 x $13.00) x 10 million shares.