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TNT Corporation is considering the acquisition of BRM Corporation. TNT has 220,000 shares of stock, with earnings per share of $2.50 and a market price
TNT Corporation is considering the acquisition of BRM Corporation. TNT has 220,000 shares of stock, with earnings per share of $2.50 and a market price per share of $30. BRM has 265,000 shares outstanding with earnings per share of $1.40 and a market price of $10. The merger is expected to increase net income of the combined companies by $275,000 (in synergistic benefits). What is the maximum exchange ratio TNT can offer and what is the minimum exchange ratio BRM could accept?
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