Banco Santander S.A. is considering the acquisition of Banco Popular Espaol, S.A., in a stock swap transaction.

Banco Santander S.A. is considering the acquisition of Banco Popular Español, S.A., in a stock swap transaction. Currently, Banco Santander’s stock is selling for €5 per share. Although shares of Banco Popular Español are currently trading at €4 per share, the firm’s asking price is €6 per share.

a. If Santander accepts Popular Español’s terms, what is the ratio of exchange?

b. If Popular has 200,000 shares outstanding, how many new shares must Santander issue to consummate the transaction?

c. If Santander has 800,000 shares outstanding before the acquisition and earnings for the merged company are estimated to be €65,000,000, what is the EPS for the merged company?