The Blue Oil Corporation and the Grey Plastics Company have agreed to a merger. The Grey Plastics

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The Blue Oil Corporation and the Grey Plastics Company have agreed to a merger. The Grey Plastics stockholders will receive 0.75 shares of Blue for each share of Grey held. Assume that no synergistic benefits are expected.
a. Complete the following table:

The Blue Oil Corporation and the Grey Plastics Company have

b. Calculate the premium percentage received by the Grey stockholders. Assume both that immediate synergistic earnings of $3 million per year will occur as a result of the merger and that the P/E ratio of the combined companies is 10.5.
c. Rework part a.
d. Rework partb.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Contemporary Financial Management

ISBN: 9780324289114

10th Edition

Authors: James R Mcguigan, R Charles Moyer, William J Kretlow

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