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Endevco Is Considering the Acquisition of Geothermal Resources in a Stock-For-Stock

Question 33

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Endevco is considering the acquisition of Geothermal Resources in a stock-for-stock exchange.Assume no immediate synergistic benefits are expected.Selected financial data on the two companies are shown below:
Endevco is considering the acquisition of Geothermal Resources in a stock-for-stock exchange.Assume no immediate synergistic benefits are expected.Selected financial data on the two companies are shown below: If Endevco is not willing to incur an initial dilution in its EPS, and if Endevco also feels that it will have to offer Geothermal shareholders a minimum of 20% over Geothermal's current market price, what is the maximum price per share that Endevco will have to pay for Geothermal's stock? A) $57.60 B) $64.33 C) $52.23 D) $60.00
If Endevco is not willing to incur an initial dilution in its EPS, and if Endevco also feels that it will have to offer Geothermal shareholders a minimum of 20% over Geothermal's current market price, what is the maximum price per share that Endevco will have to pay for Geothermal's stock?


A) $57.60
B) $64.33
C) $52.23
D) $60.00

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