In: Finance
World Enterprises is determined to report earnings per share of $2.67. It therefore acquires the Wheelrim and Axle Company. There are no gains from merging. In exchange for Wheelrim and Axle shares, World Enterprises issues just enough of its own shares to ensure its $2.67 earnings per share objective.
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a. Complete the table below for the merged
firm.
b. How many shares of World Enterprises are
exchanged for each share of Wheelrim and Axle?
c. What is the cost of the merger to World
Enterprises?
d. What is the change in the total value of the
World Enterprises shares that were outstanding before the
merger?