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What will the theoretical post-merger PE ratio be

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Question - Company A is acquiring Company B through a stock offering. Company A has a price-earnings (PE) ratio of 12, earnings of RM 33 million, and 6.25 million shares outstanding. Company B has a PE ratio of 7, earnings of RM 9.2 million, and 3 million shares outstanding. Shareholders of Company B will receive one share of Company A's stock for every three shares they hold in Company B. Assume a zero synergistic value in this merger, what will the theoretical post-merger PE ratio be for Company A based on its current stock price?

Reference no: EM133041368

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