The following data are pertinent for companies A and B. A Shs 20 million 10 million 18 в Shs 4 million 1 million 10 Present Earnings No of shares Price/earning ratio If the two companies were to merge and the exchange ratio were one 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 the merger likely to take place? If the exchange ratio were two shares of Company A for each share of Company B what would happen with respect to the above? If the exchange ratio were 1.5 shares of Company A for each share of Company B, what would happen? What exchange ratio would you recommend? а. b. С. d.

The following data are pertinent for companies A and B. A Shs 20 million 10 million 18 в Shs 4 million 1 million 10 Present Earnings No of shares Price/earning ratio If the two companies were to merge and the exchange ratio were one 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 the merger likely to take place? If the exchange ratio were two shares of Company A for each share of Company B what would happen with respect to the above? If the exchange ratio were 1.5 shares of Company A for each share of Company B, what would happen? What exchange ratio would you recommend? а. b. С. d.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter23: Corporate Restructuring

Section: Chapter Questions

Problem 7P

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