Question
Adobe is acquiring Figma offering a 50% premium over Figma's pre-announcement price, and the offer is to be paid 50% in cash and 50% in
Adobe is acquiring Figma offering a 50% premium over Figma's pre-announcement price, and the offer is to be paid 50% in cash and 50% in stock. The pre-announcement share price of the companies was $20 (Adobe) and $10 (Figma) per share. Consider the following assumptions:
The cash portion of the deal will be financed by issuing new debt. The interest expense on the new debt issued is 10% per year;
The financing fees are 2% of new debt issued, which is amortized over four years;
The total write-up of the target's tangible and intangible assets is $300 with straight-line depreciation and amortization over 10 years;
Pre-tax deal synergies are $500;
The effective tax rate of the combined entity after the acquisition is 20%;
Wall Street analysts' estimates, before the deal announcement, for the next fiscal year for both companies are:
Mean Estimates | Adobe (acquirer) | Figma (target) |
Net Income ($) | 1,000 | 700 |
EPS ($) | 1.00 | 0.70 |
Diluted Shares Out | 1,000 | 1,000 |
What is the number of newly issued acquirer shares? [ Select ] ["375", "350", "325", "300", "400"]
What is the expected acquirer EPS after the deal closes (pro-forma EPS) for the next fiscal year? [ Select ] ["$1.21", "$1.30", "$1.10", "$1.05", "$1.15"]
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