Rearden Metal has earnings per share of $3. It has 20 million shares outstanding and is trading at $10

per share. Rearden Metal is thinking of buying Associated Steel, which has earnings per share of $1.00, 10

million shares outstanding, and a price per share of $10. Rearden Metal will pay for Associated Steel by

issuing new shares. There are no expected synergies from the transaction. If Rearden offers an exchange ratio such that, at current pre-announcement share prices for both firms, the offer represents a 30% premium to buy Associated Steel, then how many new shares Rearden has to issue to buy Associated Steel?

A. 16 million

B. 13 million

C. 10 million

D. 9 million