You are employed by Eel Company and are trying to decide which company to acquire-Feel Ltd. or Feelings Corp. The relevant data are shown below.

Required:
(a) Calculate the market value of each of the three companies involved.
(b) Calculate the market value of Eel's potential bid for Feel and for Feelings.
(c) Calculate the bid premium for both potential acquisitions.
(d) Calculate the pre-acquisition EPS of the three companies involved.
(e) Calculate the pre-acquisition P/E ratio of the three companies involved.
(f) Calculate the estimated post-acquisition EPS for each of the potential acquisitions.
(g) Calculate the estimated post-acquisition share price for Eel for each of the potential acquisitions, assuming the pre-acquisition P/E ratio for Eel applies after the deal goes forward.
(h) Which acquisition do you recommend for Eel?

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Eel Ltd 1,130,000 $30.00 Feel Inc. 1,567,000 $40.00 Feelings Corp. 1,945,000 Number of shares outstanding Share price Number of Eel shares offered for each target share Post-acquisition savings 2010 net income $50.00 1,800,000 $4,000,000 $6,320,000 $5,000,000 $3,000,000