the following is my understanding
right now:
shrs outstanding RWNW ......497,685,321
Authorized Shrs RWNW .......500 million
recab rights or shrs of Arabian Recab.....47,200,000
according to the agreement, recab rights or shrs of Arabian Recab will be converted to RWNW (1 to 1 converted?), which represent no more than 98% of the newly mergered entity. That means if the new mergered company issues 100 shrs, 98 shrs will be given to the current shareholders of Arabian Recab, 2 shrs will be given to the current shareholders of RWNW.
after merger, the shares of the current shareholders of RWNW will be:
(47.2 mill /98)X2 = 0.964 mill
So, the ratio of RS will be 1 to 500 (497,685,321/0.964 = 500)
after merger, the EPS(Earning per Share) is
$29million/(47.2+0.964)million=$0.61
if we take 10 as PE ratio, after merger, the PPS(Price per share) should be $0.61x10=$6.1
If you buy 1 million shrs of current RWNW with $2400, after merger, you will own 2000 shrs of new stock, which will worth
2000shrs X $6.1 = $12,000.
Still a great deal, isn't it?
