The Birdie Golf Hybrid Golf Merger

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Running Head: BIRDIE GOLF MERGER

The Birdie Gold – Hybrid Golf Merger

Elijah Clark & Associates, LLC


BIRDIE GOLF MERGER 2

The Birdie Gold – Hybrid Golf Merger

Birdie Golf, Inc., is trying to determine whether merging with Hybrid Golf Company is a

feasible financial solution. The financial officer for Birdie has put together a financial statement,

which includes the benefits of the possible merger. The management of Birdie Golf does not

believe that Hybrid Golf has an optimal capital structure. In determining whether the merger is

feasible, management is considering company leverage, share value, cost of capital, dividends,

debt-to-equity ratios, tax loss carryforward, and future value.

Assignment Questions

Based on a provided table outlining the required investments and sources of financing,

the Birdie Golf and Hybrid Golf merger mini case asks to analyze financial aspects of the

potential merger. Questions the Birdie Golf company would like answered include: (a) should

the merger proceed if Hybrid agrees to a merger price of $68.75 per share; (b) what is the highest

price per share Birdie should pay for Hybrid; (c) what exchange ratio would satisfy the merger

terms; and (d) what is the highest exchange ratio Birdie should pay.

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