Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your company has eamings per share of $6. It has 1 million shares outstanding, each of which has a price of $24. You are thinking

image text in transcribed
Your company has eamings per share of $6. It has 1 million shares outstanding, each of which has a price of $24. You are thinking of buying TargetCo, which has earnings per share of $3,1 million shares outstanding, and a price per share of \$18. You will pay for TargetCo by issuing new shares, There are no expected synergies from the transaction. Complete parts a through d below. a. If you pay no premium to buy TargetCo, what will your earnings per share be after the merger? Your new eamings per share will be \& (Round to the nearest cent.) b. Suppose you offer an exchange ratio such that, at current pre-announcement share prices for both firms, the offer reprosonts a 20% premium to buy TargetCo. What will your eamings per share be after the merger? Your new earnings per share will be? (Round to the nearest oent)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Labour Finance And Inequality

Authors: Suzanne J. Konzelmann, Simon Deakin, Marc Fovargue-Davies, Frank Wilkinson

1st Edition

1138919721, 978-1138919723

More Books

Students also viewed these Finance questions

Question

=+a) Check the assumptions and conditions for inference.

Answered: 1 week ago