The shareholders of Bread Company have voted in favor of a buyout offer from Butter Corporation. Information about each firm is given here: Bread Butter Price-earnings ratio 5.26 21.04 Shares outstanding 57,000 228,000 Earnings $ 205,000 $ 1,025,000 Bread's shareholders will receive one share of Butter stock for every five shares they hold in Bread. What will the EPS of Butter be after the merger? What will the PE ratio be if the NPV of the acquisition is zero?
The shareholders of Bread Company have voted in favor of a buyout offer from Butter Corporation. Information about each firm is given here: Bread Butter Price-earnings ratio 5.26 21.04 Shares outstanding 57,000 228,000 Earnings $ 205,000 $ 1,025,000 Bread's shareholders will receive one share of Butter stock for every five shares they hold in Bread. What will the EPS of Butter be after the merger? What will the PE ratio be if the NPV of the acquisition is zero?
Chapter7: Corporations: Reorganizations
Section: Chapter Questions
Problem 38P
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The shareholders of Bread Company have voted in favor of a buyout offer from Butter Corporation. Information about each firm is given here: |
| Bread | Butter | |
|---|---|---|
| Price-earnings ratio | 5.26 | 21.04 |
| Shares outstanding | 57,000 | 228,000 |
| Earnings | $ 205,000 | $ 1,025,000 |
| Bread's shareholders will receive one share of Butter stock for every five shares they hold in Bread. |
| What will the EPS of Butter be after the merger? |
| What will the PE ratio be if the |
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