1 the shareholders of jolie company have decided


1. The shareholders of Jolie Company have decided in favor of a buyout from Pitt Corporation. Information about each firm is given below:

948_What will be the EPS of Pitt after merger.png

Jolie's shareholders will receive three shares of Pitt stock for every two shares they hold in Jolie.

a) What will be the EPS of Pitt after merger?

b) What will the P/E ratio be if the NPV of acquisition is zero?

2. Company A has decided to acquire Company B. Market information about the two firms are summarized below:

359_What will be the EPS of Pitt after merger1.png

a) What is the weighted average price per earnings of the combined firm AB?

b) What is the maximum number of shares firm A will be willing to offer to shareholders of firm B and the minimum number if shares acceptable to firm B?

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