Endevco Is Considering the Acquisition of Geothermal Resources in a Stock-For-Stock

Endevco is considering the acquisition of Geothermal Resources in a stock-for-stock exchange. Assume no immediate synergistic benefits are expected. Selected financial data on the two companies are shown below: $$\begin{array} { l r r } & \text { Endevco } & \text { Geothermal } \\\text { Sales (millions) } & \$ 720 & \$ 140 \\\text { Net income (millions) } & \$ 58 & \$ 16 \\\text { Common shares outstanding (millions) } & 10 & 3 \\\text { Earnings per share } & \$ 5.80 & \$ 5.33 \\\text { Common stock (price per share) } & \$ 70.00 & \$ 48\end{array}$$ ? If Endevco is not willing to incur an initial dilution in its EPS, and if Endevco also feels that it must offer Geothermal shareholders a minimum of 20% over Geothermal's current market price, what is the maximum price per share that Endevco must pay for Geothermal's stock?

A) $57.60
B) $64.33
C) $52.23
D) $60.00