Stock for stock merger, (Stock for Stock Merger) A

Stock for stock merger

Assignment Help Financial Management

Reference no: EM131178895

(Stock for Stock Merger) A Corporation is considering the acquisition of X Corporation. Each corporation has the following data:

Existing Income Number of Shares

A Corporation $4,200,000 621,000

X Corporation $2,200,000 365,000

Synergistic additional benefits from the combination are $1,200,000.

What is the minimum exchange ratio is necessary to keep the X shareholders whole in terms of earnings per share?

What is the maximum exchange ratio would the A Corporation shareholder accept in taking over X Corporation and remain whole in terms of earnings per share? (note you will need to use the formulas in the book to solve this)

Reference no: EM131178895

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