Data for Henry Company and Mayer Services are given in the following table : Item Henry Company Mayer Services Earnings available for common stock $195,000 $45,000 Number of shares of common stock outstanding 75,000 25,000 Market price per share $31 $23 Henry Company is considering merging with Mayer by swapping 1.25 shares of its stock for each share of Mayer stock. Henry Company expects its stock to sell at the same price/earnings (P/E) multiple after the merger as before merging. d. Calculate the post-merger earnings per share (EPS) for Henry Company. e. Calculate the expected market price per share of the merged firm.
Data for Henry Company and Mayer Services are given in the following table : Item Henry Company Mayer Services Earnings available for common stock $195,000 $45,000 Number of shares of common stock outstanding 75,000 25,000 Market price per share $31 $23 Henry Company is considering merging with Mayer by swapping 1.25 shares of its stock for each share of Mayer stock. Henry Company expects its stock to sell at the same price/earnings (P/E) multiple after the merger as before merging. d. Calculate the post-merger earnings per share (EPS) for Henry Company. e. Calculate the expected market price per share of the merged firm.
Chapter23: Corporate Restructuring
Section: Chapter Questions
Problem 7P
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Question
Data for Henry Company and Mayer Services are given in the following table :
|
Item
|
Henry Company
|
Mayer Services
|
|
|
|
Earnings available for common stock
|
$195,000
|
$45,000
|
|
|
|
Number of shares of common stock outstanding
|
75,000
|
25,000
|
|
|
|
Market price per share
|
$31
|
$23
|
Henry Company is considering merging with Mayer by swapping 1.25 shares of its stock for each share of Mayer stock. Henry Company expects its stock to sell at the same price/earnings (P/E) multiple after the merger as before merging.
d. Calculate the post-merger earnings per share (EPS) for Henry Company.
e. Calculate the expected market price per share of the merged firm.
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