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The shareholders of Jolie Company have voted in favor of a buyout offer from Pitt Corporation....

The shareholders of Jolie Company have voted in favor of a buyout offer from Pitt Corporation. Jolie has a price of $20 per share, earnings of $240,000, and 60,000 shares outstanding. Pitt has a price of $60, earnings of $600,000, and 120,000 shares outstanding. Jolie's shareholders will receive one share of Pitt stock for every three shares they hold in Jolie. Assume the NPV of the acquisition is zero. What will the post-merger EPS be for Pitt?

A) $4 per share

B) $4.550 per share

C) $5 per share

D) $5.793 per share

E) $6 per share

. All of the following are related to a takeover except a:

A) tender offer.

B) consolidation.

C) going private transaction.

D) proxy contest.

E) strategic alliance.

Solutions

Expert Solution

Answer:- Option (E) - $6 per share

( Explanation:- The Calculation of post merger EPS is shown below:-

Answer :- Option E - strategic alliance

( Explanation:- All of the other terms except strategic alliance is related to takeover. In takeover, one company takes control of the other company while in strategic alliance, companies work in coordination for common goals but their identity remains different and independent.)

jeff jeffy answered 1 year ago
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