Question
Big Co. would like to buy Small Co. for a 30% control premium. Currently Big Co.s stock price is $43.21, its EPS is $2.64 and
Big Co. would like to buy Small Co. for a 30% control premium. Currently Big Co.s stock price is $43.21, its EPS is $2.64 and it has 89mm shares outstanding. Currently Small Co.s stock price is $50.00 (before premium), its EPS is $3.43 and it has 17.5mm shares outstanding. Big Co.s cost of debt is 6.5% and its tax rate is 30%.
4. If Big Co. uses stock to acquire Small Co. what would Big Co.s proforma EPS be?
A) $2.70.
B) $2.64.
C) $2.56.
D) $2.48.
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Crisis Risk And Stability In Financial Markets
Authors: Juan Fernández De Guevara Radoselovics , José Pastor Monsálvez
1st Edition
1137001828, 978-1137001825
