Question
The shareholders of Flannery Company have voted in favor of a buyout offer from Stultz Corporation. Information about each firm is given here: Flannery Stultz
The shareholders of Flannery Company have voted in favor of a buyout offer from Stultz Corporation. Information about each firm is given here: |
Flannery | Stultz | |||||
Priceearnings ratio | 9.6 | 20 | ||||
Shares outstanding | 72,000 | 230,000 | ||||
Earnings | $ | 200,000 | $ | 920,000 | ||
Flannerys shareholders will receive one share of Stultz stock for every three shares they hold in Flannery. |
a-1. | What will the EPS of Stultz be after the merger? (Do not round intermediate calculations and round your final answer to 3 decimal places. (e.g., 32.161)) |
EPS | $ |
a-2. | What will the PE ratio be if the NPV of the acquisition is zero? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
PE |
b. | What must Stultz feel is the value of the synergy between these two firms? (Do not round intermediate calculations.) |
Synergy value | $ |
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