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Stock Swaps: Less Than Meets the Eye?


When a high-multiple, high-growth company buys a low-multiple, lower-growth company, earnings per share automatically increase--even though there is no increase in the combined company's value. Here's how a WorldCom/MCI combination might look.

COMPANY             STOCK        P-E      NUMBER OF       EARNINGS 
                    PRICE*                SHARES          PER SHARE
WORLDCOM            36 13/16      115     900 million     $0.32
MCI                 34 7/8         22     800 million      1.60
COMBINED            N/A            50     1.8 billion      0.70
*As of Oct. 8, 1997

DATA: S&P RATINGS SERVICES, BLOOMBERG FINANCIAL MARKETS


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Updated Oct. 9, 1997 by bwwebmaster
Copyright 1997, by The McGraw-Hill Companies Inc. All rights reserved.
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