Question
The shareholders of Jolie Company have voted in favor of a buyout offer from Pitt Corporation. Information about each firm is given here. Jolie Pitt
The shareholders of Jolie Company have voted in favor of a buyout offer from Pitt Corporation. Information about each firm is given here.
| Jolie | Pitt | |
| Price-Earnings ratio | 13.5 | 21 |
| Shares Outstanding | 75,000 | 210,000 |
| Earnings | $150,000 | $810,000 |
Jolie's shareholders will receive one share of Pitt stock for every three shares they hold in Jolie. Assume that the merger has an NPV of $0 (this means that the market price of Pitt will not change), determine each of the following:
| a. Total # shares of PItt stock after the merger | |
| b. EPS of Pitt after the merger (3 decimals, x.xxx) | |
| c. Current price of Pitt stock (hint: use the PE ratio and current Pitt data) |
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Construction accounting and financial management
Authors: Steven j. Peterson
2nd Edition
978-0135017111
