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Calculate the price per share of the combined corporation

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Reference no: EM132700764

Vtech Metal has earnings per share of $2. It has 10 million shares outstanding and is trading at $20 per share. Vtech Metal is thinking of buying Nissin Steel, which has earnings per share of $1.25, 4 million shares outstanding, and a price per share of $15. Vtech Metal will pay for Nissin Steel by issuing new shares. There are no expected synergies from the transaction. If Vtech offers an exchange ratio such that, at current pre-announcement share prices for both firms, the offer represents a 20% premium to buy Nissin Steel, calculate the price per share of the combined corporation after the merger.

Reference no: EM132700764

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