Calculate the postmerger earnings per share

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Reference no: EM131334755

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.

Reference no: EM131334755

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