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GugleTech. Inc., is an American multinational technology company that focuses on artificial intelligence, search engine, online advertising, cloud computing, computer software, quantum computing, e-commerce, and
GugleTech. Inc., is an American multinational technology company that focuses on artificial intelligence, search engine, online advertising, cloud computing, computer software, quantum computing, e-commerce, and consumer electronics. In its business expansion plan, GugleTech is planning to acquire Metronics. Inc., another American technology company. The deal to acquire Metronics, will involve a stock for stock transaction, where the Target Company would receive $70 for each share of its common stock. The Acquiring Company does not expect any change in its price/earnings multiple after the merger. Using the information provided above on these two firms and showing your work, calculate the following: a. Determine the purchase price premium. (3 marks) b. What is the exchange ratio that needs to be based on for the acquiring company to determine the number of new shares to be issued? (3 marks) c. What is the number of new shares issued by GugleTech. Inc.? (3 marks) d. What is the position the total shares outstanding of the combined companies? (3 marks) e. What is the EPS of the combined companies in post-merger situation? (2 marks) f. Determine the EPS of the GugleTech. Inc, before the merger. (2 marks)
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