if company A will buy company b: suppose: A: $share: 50 million, B: 20million current stock price: A: 30.5, B: 20 net income: A: 80, B: 22 if A issue stock to buy company B at B’s market price which is 20. what will be A’s stock price after the merger: is it: A will issue: 20*20/30.5=13.11 million share and A stock price after the merger will be: (50*30.5+20*20)/(13.11+50)=30.5 the stock price is not change, how could P/E be higher for A? (bootstrap effect)… before merger, A’s P/E ratio is 19.1, after the merger A’s P/E is 18.87, it dropped…