In the case of the Minnie and Mickey merger described in the previous problem, assume a 100 percent premium will be paid and there is a 25 percent synergistic benefit to total earnings from the merger. Will the postrnerger earnings go up or down, based on your calculations?

Data from previous problem

A merger between Minnie Corporation and Mickey Corporation is under consideration. The financial information for these firms is as follows:

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Minnie Mickey Corporation Corporation Total earnings Number of shares of stock outstanding EPS ... P/E ratio..... Market price per share... $800,000 $1,600,000 200,000 800,000 $4 $2 10x 20x $40 $40