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Company A is going to acquire Company B through a stock-for-stock transaction in which Company A will offer 0.5 share for each share of Company
- Company A is going to acquire Company B through a stock-for-stock transaction in which Company A will offer 0.5 share for each share of Company B. You are given the following information:
|
| Company A | Company B |
| Share Price | $60.00 | $20.00 |
| Earnings Per Share | 5.00 | 1.00 |
| Number of Common Shares | 20 million | 10 million |
- Calculate each stocks price/earnings multiple.
- Calculate the percentage control premium Company A is offering.
- Will the transaction be dilutive or accretive to Company A? Explain.
- Calculate the amount of any dilution/accretion in earnings per share.
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Strategic Public Finance
Authors: Stephen Bailey
1st Edition
0333922212, 978-033392221
