34.5 Benefit and Cost of Merger As the financial manager of Multibex Company you are investigat- ing the acquisition of Unibex Company. The following facts are given: Multibex Company Unibex Company Earning per share 6.00 2.00 Dividend per share *3.00 * 1.20 Price per share * 45.00 12.00 Number of shares 5,000,000 2,000,000 Investors currently expect the dividends and earnings of Unibex to grow at a steady rate of 5 percent. After acquisition this growth rate would increase to 7 percent without any additional investment. Required: (a) What is the benefit of this acquisition? (b) What is the cost of this acquisition to Multibex Company if it (i) pays ? 15 per share cash compensation to Unibex Company and (ii) offers one share for every three shares of Unibex Company? 34.5 Benefit and Cost of Merger As the financial manager of Multibex Company you are investigat- ing the acquisition of Unibex Company. The following facts are given: Multibex Company Unibex Company Earning per share 6.00 2.00 Dividend per share *3.00 * 1.20 Price per share * 45.00 12.00 Number of shares 5,000,000 2,000,000 Investors currently expect the dividends and earnings of Unibex to grow at a steady rate of 5 percent. After acquisition this growth rate would increase to 7 percent without any additional investment. Required: (a) What is the benefit of this acquisition? (b) What is the cost of this acquisition to Multibex Company if it (i) pays ? 15 per share cash compensation to Unibex Company and (ii) offers one share for every three shares of Unibex Company