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What is the amount of earnings accretion/(dilution) per share in year 1, given the information below? Details: Acquiror's pre-deal EBIT is $100 million Target's pre-deal
What is the amount of earnings accretion/(dilution) per share in year 1, given the information below?
Details:
- Acquiror's pre-deal EBIT is $100 million
- Target's pre-deal EBIT is $50 million
- Estimated synergies are $10 million
- The acquiror presently has no debt on its balance sheet
- The transaction is not expected to produce any additional goodwill
- Incremental debt used to fund the transaction is $350 million at an interest rate of 4.0%
- The Acquiror's tax rate is 25%
- The Acquiror's fully diluted common shares outstanding before and after the transaction are 100 million
A. $0.35 per share
B. $0.70 per share
C. $1.10 per share
D. $(1.85) per share
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