Able Corporation is considering the acquisition of Target Corporation. Target Corporation has 820,000 shares of...
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Able Corporation is considering the acquisition of Target Corporation. Target Corporation has 820,000 shares of stock, with earnings per share of $5.50 and a market price per share of $80. BRM has 1,265,000 shares outstanding with earnings per share of $3.81 and a market price of $52. The merger is expected to increase net income of the combined companies by $757,000 (in synergistic benefits). What is the maximum exchange ratio Able Corporation can offer and what is the minimum exchange ratio Target Corporation can accept?
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