Acquiring Company is considering the acquisition of Target Company in which Target Company would receive $36.00 for each share of its common stock.
Acquiring Co. Target Co.
Earnings available for $500.000 $300.000
common stock
Number of shares of 500.000 250.000
common stock
outstanding
Market price per share $30.00 $27.00
If the transaction is using 100% of Acquiring Co.'s stock, the exchange ratio is
The number of new shares issued by Acquiring Company is
The post-merger EPS of the combined company is
If the transaction is using 100% cash, all the cash is borrowed at an annual rate of 7.5%, and the tax rate is 40%, the post-merger earnings of the combined company are
And the post-merger EPS of the combined company is
