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Pinder Ltd is considering a merger with Value Co, where Pinder Ltd will issue 2 of its own shares for 5 shares of Value Co. The share price for Pinder Ltd is $33.46 and the share price for Value Co is $11.48. The price-to-earnings ratio for Pinder Ltd is 9.96 and the price-to-earnings ratio for Value Co is 5.34. The number of shares outstanding for Pinder Ltd is 485,418 and the number of shares outstanding for Value Co is 205,951. There are no operational synergies expected from the merger, but Pinder Ltd believes that the Value Co was undervalued by the market due the lack of investor relations management, and that once it is included as part of Pinder Ltd, that Value Co's business would be valued 50% higher in terms of price or the price-to-earnings ratios. Based only on the information above, what is the expected price-to-earnings ratio of the combined firm if Pinder Ltd's beliefs are correct? (round to the nearest two decimal places)

Reference no: EM133061646

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