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Assume that UMO, Inc. is planning to acquire MUR Corp. The acquisition is not expected to generate any synergies and UMO is planning to offer
Assume that UMO, Inc. is planning to acquire MUR Corp. The acquisition is not expected to generate any synergies and UMO is planning to offer 2 new shares of its own for every 8 shares of MUR. The table below provides some additional details for both companies before the acquisition. Acquirer (UMO)Target (MUR) EPS $3.15 $1.25 Share price $47 $10 P/E ratio 15.00 8.00 Number of shares 450,000 375,000 Earnings $1,417,500 $468,750 Market value $21,262,500 $3,750,000 The EPS and P/E ratio of the combined company are closest to: EPS: $3.47; P/E: 12.15 EPS: $3.47; P/E: 13.26 EPS: $4.21; P/E: 12.25 EPS: $4.21; P/E: 14.75 None of the above
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