U Corporation is considering the acquisition of E Corporation. E Corporation has 1,020,000 shares of stock,...

U Corporation is considering the acquisition of E Corporation. E Corporation has 1,020,000 shares of stock, with earnings per share of $4.50 and a market price per share of $80. U Corporation has 1,565,000 shares outstanding with earnings per share of $6.00 and a market price of $55. The merger is expected to increase net income of the combined companies by $2,600,000 (in synergistic benefits). What is the maximum exchange ratio U Corporation can offer and what is the minimum exchange ratio E Corporation can accept?

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jeff jeffy answered 2 years ago

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