Info

Shares outstanding

60,000

180,000

Earnings

$300,000

$675,000

Creed's shareholders will receive one share of What If stock for every three shares they hold in Creed.

a. What will the EPS of What If be after the merger? What will the PE ratio be if the NPV of the acquisition is zero?

b. What must What If feel is the value of the synergy between these two firms? Explain how your answer can be reconciled with the decision to go ahead with the takeover.

Cash versus Stock as Payment Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm T). Assume that both firms have no debt outstanding.

0 0

Post a comment