Question
A merger between Minnie Corporation and Mickey Corporation is under consideration. The financial information for these firms is as follows: Minnie Corporation Mickey Corporation Total
A merger between Minnie Corporation and Mickey Corporation is under consideration. The financial information for these firms is as follows: Minnie Corporation Mickey Corporation Total earnings $800,000 $1,600,000 Number of shares of stock outstanding 200,000 800,000 EPS $4 $2 P/E ratio 10X 20X Market price per share $40 $40 a. On a share-for-share exchange basis, what will the postmerger EPS be? (Round the final answer to 2 decimal places.) Postmerger earnings per share $ b. If Mickey Corporation pays a 25 percent premium over the market value of Minnie Corporation, how many shares will be issued? Shares issued $ c. With the 25 percent premium, what will the postmerger EPS be? (Round the final answer to 2 decimal places.) Postmerger earnings per share $?
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