Rearden Metal Company has earnings per share of $2. It has 10 million shares outstanding and is trading at $20 per share. Rearden is thinking of buying Associated Steel, which has earnings per share of $1.25, 4 million shares outstanding, and a price per share of $15. There are no expected synergies from the transaction. Rearden will pay for Associated Steel by issuing new shares, and the exchange ratio will be such that, at current pre-announcement share prices for both firms, the offer represents a 20% premium to buy Associated Steel. How many new shares will Rearden have to issue? 1.2 million 8.3 million 4.9 million 3.6 million Question 8 1 pts Continuing with Rearden's acquisition of Associated Steel from the prior question.. what will the price per share of the combined corporation be after the acquisition? $28.32 $19.12 $9.83 $17.19
Rearden Metal Company has earnings per share of $2. It has 10 million shares outstanding and is trading at $20 per share. Rearden is thinking of buying Associated Steel, which has earnings per share of $1.25, 4 million shares outstanding, and a price per share of $15. There are no expected synergies from the transaction. Rearden will pay for Associated Steel by issuing new shares, and the exchange ratio will be such that, at current pre-announcement share prices for both firms, the offer represents a 20% premium to buy Associated Steel. How many new shares will Rearden have to issue? 1.2 million 8.3 million 4.9 million 3.6 million Question 8 1 pts Continuing with Rearden's acquisition of Associated Steel from the prior question.. what will the price per share of the combined corporation be after the acquisition? $28.32 $19.12 $9.83 $17.19
Chapter15: Dividend Policy
Section: Chapter Questions
Problem 4P
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