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Acquiring Company is considering the acquisition of Target Company in a share-for-share transaction in which Target Company would receive $50.00 for each share of its
Acquiring Company is considering the acquisition of Target Company in a share-for-share transaction in which Target Company would receive $50.00 for each share of its common stock. Acquiring Company does not expect any change in its P/E multiple after the merger. Acquiring Co. Target Co. Earnings available for common stock $150,000 $30,000 Number of shares of common stock outstanding 60,000 20,000 Market price per share $60.00 $40.00 Using the preceding information about these two firms and showing your work, calculate the following:
a. The exchange ratio
B. New shares issued by acquiring company
C. Total shares outstanding of the combined companies
D. Pre merger eps of acquiring company
F. Postmerger share price
I need the calculation of each. Thank you.
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