Zentos Technologies is considering acquiring another firm in a stock for stock transaction in which the acquired company would receive $75.50 for each share of its stock. Zentos does not expect to experience any change in its P/E after the merger.

Zentos TechnologiesTarget CompanyEarnings$365,355 million$73,071 millionShares Outstanding100,000 million35,000 millionMarket Price$80.75$53.25

Calculate the purchase price premium that Zentos is contemplating. (Show the purcahse price premium as a percentage of the current share price of the Target Company.)

How many new shares will need to be issued by Zentos?

What would be the post-merger EPS of the combined company?

As proposed, this transaction is dilutive to Zentos shareholders. Show the supporting calculations in terms of post-merger EPS and post-merger share price.

Above what level of combined earnings improvements and/or cost savings would this potential transaction not be dilutive to Zentos shareholders?