Question
In: Finance
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. Information about each firm is given here: |
| Jolie | Pitt | |||||
| Price–earnings ratio | 9.9 | 29 | ||||
| Shares outstanding | 78,000 | 290,000 | ||||
| Earnings | $ | 260,000 | $ | 990,000 | ||
|
Jolie's shareholders will receive one share of Pitt stock for every three shares they hold in Jolie. |
| a-1 |
What will the EPS of Pitt be after the merger? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) |
| EPS | $ |
| a-2 |
What will the PE ratio be if the NPV of the acquisition is zero? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| PE |
| b. |
What must Pitt feel is the value of the synergy between these two firms? |
| Synergy value | $ |
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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. Information about each firm is
given here:
Jolie
Pitt
Price–earnings ratio
18.2
30
Shares outstanding
78,000
300,000
Earnings
$
130,000
$
910,000
Jolie's shareholders will receive one share of Pitt stock for
every three shares they hold in Jolie.
a-1
What will the EPS of Pitt be after the merger? (Do not
round intermediate calculations and round your answer to 3 decimal
places,...
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...
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. Information about each firm is
given here:
Jolie
Pitt
Price–earnings ratio
13.2
37
Shares outstanding
99,000
370,000
Earnings
$
230,000
$
920,000
Jolie's shareholders will receive one share of Pitt stock for
every three shares they hold in Jolie.
a-1
What will the EPS of Pitt be after the merger? (Do not
round intermediate calculations and round your answer to 3 decimal
places,...
The shareholders of Bread Company have voted in favor of a buyout offer from Butter Corporation....
The shareholders of Bread Company have voted in favor of a
buyout offer from Butter Corporation. Information about each firm
is given here: Bread Butter Price-earnings ratio 9 28 Shares
outstanding 81,000 280,000 Earnings $ 255,000 $ 850,000 Bread's
shareholders will receive one share of Butter stock for every three
shares they hold in Bread. a-1. What will the EPS of Butter be
after the merger? (Do not round intermediate calculations and round
your answer to 3 decimal places, e.g.,...
The shareholders of Flannery Company have voted in favor of a buyout offer from Stultz Corporation....
The shareholders of Flannery Company have voted in favor of a
buyout offer from Stultz Corporation. Information about each firm
is given here:
Flannery
Stultz
Price–earnings ratio
12.8
35
Shares outstanding
96,000
350,000
Earnings
$
210,000
$
840,000
Flannery’s shareholders will receive one share of Stultz stock for
every three shares they hold in Flannery.
a-1. What will the EPS of Stultz be after the
merger? (Do not round intermediate calculations and round
your answer to 3 decimal places, e.g.,...
The shareholders of Barley Corporation have voted in favor of a buyout offer from Wheat Corporation....
The shareholders of Barley Corporation have voted in favor of a
buyout offer from Wheat Corporation. Information about each firm is
given here:
Barley
Wheat
Price/earnings ratio
13.5
21
Shares outstanding
90,000
210,000
Earnings
$180,000
$810,000
Barley shareholders will receive one share of Wheat stock for
every three shares they hold of Barley.
Required
1) What will the EPS of Wheat
be after the merger? What will be the P/E ratio if the NPV of the
acquisition is 0?
2) What must...
Cerner Corporation announced a first-come, first-serve stock repurchase offer to its shareholders – the company agreed...
Cerner Corporation announced a first-come, first-serve stock
repurchase offer to its shareholders – the company agreed to
repurchase 2,653,780 shares of its common stock in exchange for
total consideration of $173,434,000. Cerner had 329,641,500 total
shares outstanding before the redemption. You acquired 16,482,075
shares of Cerner's stock two years ago for $20/share. You were the
only shareholder to participate in the repurchase offer and Cerner
agreed to redeem the total number of shares directly from you.
Choose the response that...
Cerner Corporation announced a first-come, first-serve stock repurchase offer to its shareholders – the company agreed...
Cerner Corporation announced a first-come, first-serve stock
repurchase offer to its shareholders – the company agreed to
repurchase 2,653,780 shares of its common stock in exchange for
total consideration of $173,434,000. Cerner had 329,641,500 total
shares outstanding before the redemption.
You acquired 16,482,075 shares of Cerner's stock two years ago
for $20/share. You were the only shareholder to participate in the
repurchase offer and Cerner agreed to redeem the total number of
shares directly from you.
Using the applicable tax...
Cerner Corporation announced a first-come, first-serve stock repurchase offer to its shareholders – the company agreed...
Cerner Corporation announced a first-come, first-serve stock
repurchase offer to its shareholders – the company agreed to
repurchase 2,653,780 shares of its common stock in exchange for
total consideration of $173,434,000. Cerner had 329,641,500 total
shares outstanding before the redemption. You acquired 16,482,075
shares of Cerner's stock two years ago for $20/share. You were the
only shareholder to participate in the repurchase offer and Cerner
agreed to redeem the total number of shares directly from you.
Using the applicable tax...
Briefly explain the economic reason why acquirers have to offer a premium to the target’s shareholders....
Briefly explain the economic reason why acquirers have to offer
a premium to the target’s shareholders. Then briefly explain one of
the ways that the size of that premium can be measured and the
economic logic behind the calculation you choose
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