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A reverse acquisition: BX is a larger entity which post-merger has 56% of the combined ABX Ltd. AX has 700k pre-merger shares; total combined = 1,250k. Compute the notional shares BX issues to AX shareholders (for purposes of measuring consideration), assuming BX share FV ₹20.
ANotional shares 1,250k; PC ₹25,000k
BNotional shares 700k; PC ₹14,000k
CNotional shares 550k; PC ₹11,000k (550k × ₹20)
DNotional shares 250k; PC ₹5,000k
Answer & Solution
Correct answer: C. Notional shares 550k; PC ₹11,000k (550k × ₹20)
If BX's pre-merger 700k = 56% of combined → total combined = 1,250k → BX must notionally issue 550k to AX shareholders to maintain that 56%/44% split. PC = 550k × ₹20 = ₹11,000k.
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