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Rearden Metal has earnings per share of $2. It has $10 million shares outstanding and is...

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Finance

Rearden Metal has earnings per share of $2. It has $10 millionshares outstanding and is trading at $20 per share. Rearden Metalis thinking of buying Associated Steel, which has earnings pershare of $1.25, 4 million shares outstanding, and a price per shareof $15. Rearden metal will pay for Associated Steel by issuing newshares. There are no expected synergies from the transaction.

If Rearden pays no premium to buy Associated Steel, then what isRearden's earnings per share after the merger?

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4.4 Ratings (561 Votes)
Reardens earnings per share after the merger Total earnings after the merger Total Earnings of Rearden Metal Earnings per share x Number of shares outstanding 10 Million shares x 2 per share 20 Million Total Earnings    See Answer
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Rearden Metal has earnings per share of $2. It has $10 millionshares outstanding and is trading at $20 per share. Rearden Metalis thinking of buying Associated Steel, which has earnings pershare of $1.25, 4 million shares outstanding, and a price per shareof $15. Rearden metal will pay for Associated Steel by issuing newshares. There are no expected synergies from the transaction.If Rearden pays no premium to buy Associated Steel, then what isRearden's earnings per share after the merger?

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