What is the likely change in wealth for Company M’s shareholders (in total) if the bid is accepted?

CORRECT TEXT

Company M plans to bid for Company

J. Company M has 20 million shares in issue and a current share price of $10.00 before publicly announcing the planned takeover. Company J has 10 million shares in issue and a current share price of $4.00.

The directors of Company M are considering an all-share bid of 1 Company M shares for 2 Company J shares.

Synergies worth $20m are expected from the acquisition.

What is the likely change in wealth for Company M’s shareholders (in total) if the bid is accepted?

Give your answer to the nearest $ million.

$ ? million

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Answer: 8