Your company has earnings per share of $ $3\mathrm{.}52.$ It has $1\mathrm{.}9$ million shares$$ outstanding, each of which has a price of $ $49.$ You are thinking of buying$$ TargetCo, which has earnings per share of $ $1\mathrm{.}76,1\mathrm{.}9$ million shares$$ outstanding, and a price per share of $ $24.$ You will pay for TargetCo by issuing new shares. There are no expected synergies from the transaction.

a$.$ If you pay no premium to buy$$ TargetCo, what will your earnings per share be after the$$ merger?

b$.$ Suppose you offer an exchange ratio such$$ that, at current$$ pre$-$announcement share prices for both$$ firms, the offer represents a $15\%$ premium to buy TargetCo. What will your earnings per share be after the$$ merger?

c$.$ What explains the change in earnings per share in part $($a$)?$ Are your shareholders any better or worse$$ off?

d$.$ What will your$$ price$-$earnings ratio be after the merger$($if you pay no$$ premium$)?$ How does this compare to your$$ P$/$E ratio before the$$ merger? How does this compare to$$ TargetCo's premerger$$ P$/$E ratio?