In: Finance
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 | $ |