finance work : need in 2 hoursPglamb
On July 3, 2015, health insurer Aetna Inc. announced its decision to acquire smaller rival Humana Inc. This is considered as one of the largest deals in the insurance industry.
Here is some information on pre-transaction prices and shares outstanding of two companies.
- Stock price as of July 2, 2015: $125.51 per share
- Number of shares outstanding (pre-transaction) 348.60 million
- Stock price as of July 2, 2015: $187.50 per share
- Number of shares outstanding (pre-transaction) 149.78 million
Aetna is offering $230 per share to Humana shareholders using a combination of cash and stock. The cash portion of the offer is $125 in cash. The remaining consideration would be offered as Aetna stock in exchange for Humana stock.
Assuming no synergies in the merger, what is the maximum exchange ratio that Aetna can offer to Humana shareholders without diluting the value of its own stock? Please input your answer in the box below and round to three decimal points.