Question
As a financial analyst at Bank of America, you are analyzing the impact of the merger and acquisition on a companys financial performance. You collected
As a financial analyst at Bank of America, you are analyzing the impact of the merger and acquisition on a companys financial performance. You collected the following data.
Firm A | Firm T | |||
Price per share | $70.00 | $15.00 | ||
Total earnings | $700.00 | $100.00 | ||
Share outstanding | 200 | 80 |
Suppose Company A will acquire Company T. Company A will offer three new share of A for every seven shares of T.
(keep two decimal places please.) I. If investors are aware that there are no economic gains from the merger, please answer part a, b, c, and d a. what will be the total number of shares for the combined company after the merger? (sample answer: 138) b. what will be the price per share for the combined company after the merger? (sample answer: $138.45) c. what will be the earnings per share for the combined company after the merger? (sample answer: $138.45) d. what will be the price-earnings ratio for the combined company after the merger? (sample answer: 38.45) II. Now suppose that the merger really does increase the value of the combined firm by $5000, please answer part e, f, g, and h: e. what will be the price per share for the combined company after the merger? (sample answer: $138.45) f. what is the price-earnings ratio for the combined company after the merger? (sample answer: 27.50) g. what is the final merger premium in dollar does Company A pay to Company T (sample answer: $450.50) h. what is the initial merger premium promised in dollar does Company A pay to Company T (sample answer: $450.50)
Please answer everything questions A-H and please label each answer in bold
Thank you so much
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