Apex corporation is considering the purchase of pinnacle, Ask an Expert

Finance

Apex Corporation is considering the purchase of Pinnacle Company in a stock-forstock exchange. Selected data on the two companies are shown in the following table:

	Apex	Pinnacle
Sales(millions)	$750	$175
Earning after taxes(millions)	$100	$20
Common share outstanding(millions)	50	20
Share Price	$40	$15
Earning per share	$2.00	$1.00
Dividend per share	$1.00	$0.40
P/E ratio	20	15
Dividend payout ratio	50%	40%

Assume that there are no synergistic benefits as the result of the merger. Determine EPS for the combined company if Apex offers a

a. 20 percent premium for Pinnacle

b. 40 percent premium for Pinnacle

c. 50 percent premium for Pinnacle.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92088343

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