Tangshan Mining Is Attempting to Acquire Zhengsen Mining

question 16

Essay

Tangshan Mining is attempting to acquire Zhengsen Mining. Selected financial data is presented for both companies in the table below: Tangshan Mining has sufficient authorized but unissued shares to carry out the proposed merger.
(a) Calculate the EPS of Tangshan Mining and Zhengsen Mining before the merger.
(b) If the ratio of exchange is 1.8, what will be the earnings per share of the merged company?
(c) Repeat part (a) if the ratio of exchange is 2.0.
(d) Repeat part (a) if the ratio of exchange is 2.2
(e) discuss the principal illustrated by your answers to parts (a) through (d)

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Definitions:

Own Name

The legal identification used by an individual or entity for conducting transactions or signing contracts.

Paid-In Capital

The amount of money a company has received from shareholders in exchange for stock.

Organizational Costs

Expenses related to the formation of a corporation or business entity, including legal fees, registration fees, and promotional expenses.

Intangible Asset

An asset that lacks physical substance and is not financial in nature, such as patents, trademarks, and goodwill.