XYZ Ltd. is considering merger with ABC Ltd. The shares of XYZ Ltd. are currently traded @ ₹25 each. It has 2,00,000 shares outstanding and its earnings after tax (EAT) amount to ₹4,00,000. ABC Ltd. has 1,00,000 shares o
CS Professional · Capital Commodity and Money Market · PYQS · December 2014
XYZ Ltd. is considering merger with ABC Ltd. The shares of XYZ Ltd. are currently traded @ ₹25 each. It has 2,00,000 shares outstanding and its earnings after tax (EAT) amount to ₹4,00,000. ABC Ltd. has 1,00,000 shares outstanding, current market price per share is ₹12.50 and its EAT are ₹1,00,000. The merger will be effected by means of stock swaps (exchange). ABC Ltd. has agreed to a plan under which XYZ Ltd. will offer the current market value of the shares of ABC Ltd.: What are the pre-merger earnings per share (EPS) and P/E ratio of both the companies ?
Topics: Mergers and Acquisitions, Financial Analysis
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