Wilson Industries is considering the acquisition of the Blanchard Company in a stockfor-stock exchange. Selected financial data for the two companies are shown next.
An immediate synergistic earnings benefit of $1 million is expected in this merger, due to cost savings.
|
Wilson |
Blanchard
|
| Sales(millions) |
$150 |
$30 |
| Earning after taxes(millions) |
$25 |
$3.5 |
| Common share outstanding(millions) |
8
|
2 |
Earning per share
|
$3.125 |
$1.75 |
| Dividends per share |
$1.50 |
$0.75 |
| Common stock price per share |
$40 |
$19.50 |
Calculate the postmerger earnings per share if the Blanchard shareholders accept an offer of $22 per share in a stock-for-stock exchange.