Winterbourne is considering a takeover of Monkton Inc. Winterbourne has 28 million shares outstanding, which...
90.2K
Verified Solution
Link Copied!
Question
Finance
Winterbourne is considering a takeover of Monkton Inc. Winterbourne has 28 million shares outstanding, which sell for $76 each. Monkton has 23 million shares outstanding, which sell for $38 each. Merger gains are estimated at $115 million. If Winterbourne has a price-earnings ratio of 12 and Monkton has a P/E ratio of 8 , what should be the P/E ratio of the merged firm? Assume in this case that the merger is financed by an issue of new Winterbourne shares. Monkton will get one Winterbourne share for every two Monkton shares held. Assume that merged firm will have net earnings equivalent to the sum of each individual firm. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
