Marla's Cafe is attempting to acquire the Victory Club. Certain financial data on these corporations are summarized in the following table. Item Marla's Cafe Victory Club Earnings available for common stock $45,000 $8,000 Numbers of shares of common stock outstanding $50,000 $7,000 Market price per share $16 $30 Marla's Cafe has sufficient authorized but unissued shares to carry out the proposed merger. If the ratio of exchange is 1.8, what will be the earnings per share (EPS) based on the original shares of each firm?

Marla's Cafe is attempting to acquire the Victory Club. Certain financial data on these corporations are summarized in the following table. Item Marla's Cafe Victory Club Earnings available for common stock $45,000 $8,000 Numbers of shares of common stock outstanding $50,000 $7,000 Market price per share $16 $30 Marla's Cafe has sufficient authorized but unissued shares to carry out the proposed merger. If the ratio of exchange is 1.8, what will be the earnings per share (EPS) based on the original shares of each firm?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter23: Corporate Restructuring

Section: Chapter Questions

Problem 3P

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Prior to the merger, Glassons has $1,250 in total earnings with 750 shares outstanding at a market price per share of $42. Country Road has $740 in total earnings with 220 shares outstanding at $18 per share. Assume Glassons acquires Country Road via an exchange of stock at a price of $20 for each share of Country Road's stock. Both Glassons and Country Road have no debt outstanding. What will the earnings per share of Glassons be after the merger?

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Item	Marla's Cafe	Victory Club
Earnings available for common stock	$45,000	$8,000
Numbers of shares of common stock outstanding	$50,000	$7,000
Market price per share	$16	$30