Strategic Acquisitions Involving Common Stock Example-Company A will acquire Company B with shares of common stock Company a Company B Present earnings $20,000000 $5,000,000 Shares outstanding 5,000.000 2,000,000 Earnings per share $400 $250 Price per share $6400 $3000 Price /earnings ratio 16 12 23-823-8 Strategic Acquisitions Involving Common Stock Example -- Company A will acquire Company B with shares of common stock. Present earnings $20,000,000 $5,000,000 Shares outstanding 5,000,000 2,000,000 Earnings per share $4.00 $2.50 Price per share $64.00 $30.00 Price / earnings ratio 16 12 Company A Company B