Shuster Merges with Leverne

question 30

Essay

Shuster merges with Leverne. Shuster agrees to exchange 25 of its shares for every 50 of Leverne's old shares, so that Shuster will have 75 shares available after the merger. There is no synergy. Calculate the EPS along with other information below for the combined firm in two cases; one where the market is smart, and another when the market is fooled.

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Definitions:

Imperfect Competition

A market structure characterized by a few sellers or buyers, creating an environment where the entities do not have to accept the market price and can influence it instead.

Inefficiency

The situation where resources are not used in the best possible way or when an economy or process could achieve more output without changing input levels.

Linking Pins

Roles or individuals that connect different groups or levels within an organization, facilitating communication and coordination.

Gatekeepers

Individuals or entities that control access to information, resources, or access points within a system or organization.