Calculate zeniths postmerger earnings per share

Reference no: EM13926536

Zenith Industries is considering the acquisition of the Nadir Corporation in a stock-for-stock exchange. (The expression stock-for-stock exchange means that the common stock of one company is exchanged for the common stock of another.) Assume that no immediate synergistic benefits are expected. Selected financial data on the two companies are shown here:

	Zenith	Nadir
Sales (millions)	$500	$100
Earnings after taxes (millions)	$ 30	$ 12
Common shares outstanding (millions)	6	2
Earnings per share	$ 5	$ 6
Common stock price per share	$ 50	$ 40
Dividends per share	$ 2	$ 1.50

a. If Zenith is not willing to incur an initial dilution in its earnings per share- that is, not have the postmerger earnings per share be below $5 per share- and if Zenith also feels that it will have to offer the Nadir shareholders a min- imum of 25 percent over Nadir's current market price, what is the relevant range of Nadir per-share stock prices with which Zenith is working?

b. Calculate Zenith's postmerger earnings per share if the Nadir stockholders accept an offer by Zenith of $50 a share in a stock-for-stock exchange.

Reference no: EM13926536

Questions Cloud

Mean of the specific probability distribution : A police department reports that the probabilities that 0, 1, 2, and 3 burglaries will be reported in a given day are 0.49, 0.42, 0.06 and 0.03, respectively. What is the mean of the given probability distribution?

Simple program that demonstrates that : 1. How would you output tabbed text from a Java program? Please write a simple program that demonstrates that. Make sure to compile and test your code before posting it here.

Define the standard deviation : Please solve other questions and other parts by hand, clearly show your work to get the full mark for each question. For all decimal results, please keep three decimal places.

Leadership of the selected country : Assess the positive and negative effects that peace and war, respectively, have on the distribution of foreign aid in the developing country that you have selected. Support your response with concrete examples of each of the results that you have ..

Calculate zeniths postmerger earnings per share : Calculate Zenith's postmerger earnings per share if the Nadir stockholders accept an offer by Zenith of $50 a share in a stock-for-stock exchange.

Identify the decision-making model that you used : Now, think about a past decision that you made that did not work out the way you intended. In your initial discussion post, address the following: Identify the decision-making model that you used at the time the decision was made, and explain why ..

Linear correlation coefficient to the scatter diagram : Match the linear correlation coefficient to the scatter diagram. The scales on the x- and y- axes are the same for each scatter diagram.

Positive and negative effects that peace and war : Assess the positive and negative effects that peace and war, respectively, have on the distribution of foreign aid in the developing country that you have selected. Support your response with concrete examples of each of the results that you have ..

Globalization and competition strategy : There are many aspects to Supply Chain Management. There is more than just the product conception, procurement of material, production, manufacturing, and transportation. There are concepts, approaches, and outside factors that have a great impac..

User Account

All Pages