Two weeks ago, Universal Holdings Inc. and Marston Manufacturing Company agreed to a merger in which Universal will purchase Marston using a stock-for-stock transaction. Universal's latest evaluation of the deal expects no synergistic benefits from the merger and has noted that its commor stock is currently priced at $80.00 per share; Marston's shares are trading for $48.00 per share. Universal has offered a 20% premium over the current price for Marston's shares. According to the terms of the purchase, the transaction's exchange ratio, which indicates the number of Universal shares that each Marston shareholder will receive for each share sold, will be. falls
Two weeks ago, Universal Holdings Inc. and Marston Manufacturing Company agreed to a merger in which Universal will purchase Marston using a stock-for-stock transaction. Universal's latest evaluation of the deal expects no synergistic benefits from the merger and has noted that its commor stock is currently priced at $80.00 per share; Marston's shares are trading for $48.00 per share. Universal has offered a 20% premium over the current price for Marston's shares. According to the terms of the purchase, the transaction's exchange ratio, which indicates the number of Universal shares that each Marston shareholder will receive for each share sold, will be. falls
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Two weeks ago, Universal Holdings Inc. and Marston Manufacturing Company agreed to a merger in which Universal will purchase Marston using a
stock-for-stock transaction. Universal's latest evaluation of the deal expects no synergistic benefits from the merger and has noted that its common
stock is currently priced at $80.00 per share; Marston's shares are trading for $48.00 per share. Universal has offered a 20% premium over the
current price for Marston's shares.
According to the terms of the purchase, the transaction's exchange ratio, which indicates the number of Universal shares that each Marston
shareholder will receive for each share sold, will be
Given this information and that which follows, complete the table regarding the Universal-Marston merger.
Balance sheet data
Total assets
Total liabilities
Total equity
Income statement data
Sales
Earnings after taxes
Common shares outstanding
Additional information
Earnings per share
Price-to-earnings ratio
Universal
Marston
$16,000,000
$2,750,000
6,800,000
962,500
9,200,000 1,787,500
$80,000,000 $25,000,000
9,600,000
2,000,000
5,000,000
750,000
Consolidated Financial Data
7,762,500
11,600,000
55.00
True or False: The company with a larger market value in a merger is always the acquirer, and the company with a smaller market value in a merger is
the target. The merger is expected to create synergistic benefits for the target company.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fabaad2bd-7fe3-426c-9d18-ce59487e8f9b%2Fa75f5fa0-1c3a-477f-ae3f-fb113d250b1b%2Fle6cm3b_processed.png&w=3840&q=75)
Transcribed Image Text:Two weeks ago, Universal Holdings Inc. and Marston Manufacturing Company agreed to a merger in which Universal will purchase Marston using a
stock-for-stock transaction. Universal's latest evaluation of the deal expects no synergistic benefits from the merger and has noted that its common
stock is currently priced at $80.00 per share; Marston's shares are trading for $48.00 per share. Universal has offered a 20% premium over the
current price for Marston's shares.
According to the terms of the purchase, the transaction's exchange ratio, which indicates the number of Universal shares that each Marston
shareholder will receive for each share sold, will be
Given this information and that which follows, complete the table regarding the Universal-Marston merger.
Balance sheet data
Total assets
Total liabilities
Total equity
Income statement data
Sales
Earnings after taxes
Common shares outstanding
Additional information
Earnings per share
Price-to-earnings ratio
Universal
Marston
$16,000,000
$2,750,000
6,800,000
962,500
9,200,000 1,787,500
$80,000,000 $25,000,000
9,600,000
2,000,000
5,000,000
750,000
Consolidated Financial Data
7,762,500
11,600,000
55.00
True or False: The company with a larger market value in a merger is always the acquirer, and the company with a smaller market value in a merger is
the target. The merger is expected to create synergistic benefits for the target company.
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