Whipple Industries is considering the acquisition of the Blanchard Company in a stock-for stock exchange.Selected financial data for the two companies is shown below.No synergy is expected in this merger.

Determine the post-merger earnings per share if the Blanchard company shareholders accept an offer of $22 per share in a stock-for-stock exchange.
A)$2.85
B)$3.175
C)$3.13
D)$1.75

Question

Whipple Industries is considering the acquisition of the Blanchard Company in a stock-for stock exchange.Selected financial data for the two companies is shown below.No synergy is expected in this merger.

Determine the post-merger earnings per share if the Blanchard company shareholders accept an offer of $22 per share in a stock-for-stock exchange.
A)$2.85 
B)$3.175 
C)$3.13 
D)$1.75

Quizplus · Accepted Answer

Number of new shares = 2 million($22/$40) = 1.1 million
EPS post-merger = ($25 + $3.5)/(8 + 1.1) = $3.13

Whipple Industries Is Considering the Acquisition of the Blanchard Company