The following data are pertinent for Companies A and B: a. If the two companies were to
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a. If the two companies were to merge and the share exchange ratio were 1 share of Company A for each share of Company B, what would be the initial impact on earnings per share of the two companies? What is the market value exchange ratio? Is a merger likely to take place?
b If the share exchange ratio were 2 shares of Company A for each share of Company B, what would happen with respect to Part (a)?
c. If the exchange ratio were 1.5 shares of Company A for each share of Company B, what would happen?
d. What exchange ratio would you suggest?
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a Shares offered of Company A 1 million PREMERGER Company A Company B Present earnings in millions 20 4 Shares outstanding in millions 10 1 PE ratio 1...View the full answer
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Related Book For 
Fundamentals Of Financial Management
ISBN: 9780273713630
13th Revised Edition
Authors: James Van Horne, John Wachowicz
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