Pea Inc. is considering the acquisition of Shooter Ltd. The most recent data is presented below. Pea will offer one of its shares for two shares of Shooter if they decide to go ahead with the deal. Net income for 2011 is expected to grow by 10% at Pea and by 20% at Shooter, excluding any synergistic merger savings. The most recent data is presented below.

Required:
(a) Calculate the 2010 EPS and P/E ratio for both Pea and Shooter.
(b) Calculate the percentage premium contained in the acquisition price.
(c) Calculate the number of new shares outstanding for Pea if the acquisition goes ahead.
(d) Calculate the estimated new share price for Pea Inc. using 2011 data as if the deal proceeds.

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2010 Pea Inc. 2010 Shooter Ltd 50,000,000 $15 3,000,000 Net assets Number of shares outstanding Share price Net income Merger savings in 2011 $15,000,000 750,000 $16 600,000 $40 5,000,000 1,000,000