Market Value Impact Notice that both earnings per share and market price per share have risen because of the acquisition. This is known as bootstrapping The market price per share=(P/EX (Earnings) Therefore, the increase in the market price per share is a function of an expected increase in earnings per share and the P/E ratio not declining. The apparent increase in the market price is driven by the assumption that the p/e ratio will not change and that each dollar of earnings from the acquired firm will be priced the same as the acquiring firm before the acquisition(a p/E ratio of 18) 23-1923-19 Market Value Impact Notice that both earnings per share and market price per share have risen because of the acquisition. This is known as 揵ootstrapping. The market price per share = (P/E) x (Earnings) Therefore, the increase in the market price per share is a function of an expected increase in earnings per share and the P/E ratio NOT declining. The apparent increase in the market price is driven by the assumption that the P/E ratio will not change and that each dollar of earnings from the acquired firm will be priced the same as the acquiring firm before the acquisition (a P/E ratio of 18)