Strategic Acquisitions Involving Common Stock Example - Company B has agreed on an offer of $45 in common stock of Company A. Surviving Company A Total earnings $25,000,000 Shares outstanding 6,406,250 Earnings per share $390 Exchange ratio=$45/$64 = 703125 New shares from exchange = 703125 X 2,000,000 =1406250 23-1223-12 Strategic Acquisitions Involving Common Stock Example -- Company B has agreed on an offer of $45 in common stock of Company A. Total earnings $25,000,000 Shares outstanding* 6,406,250 Earnings per share $3.90 Surviving Company A Exchange ratio = $45 / $64 = .703125 * New shares from exchange = .703125 x 2,000,000 = 1,406,250