Question
You're given the following details of an acquisition of Target Co. by Acquirer Ltd.. What is the pro forma FY+1 cash flow per share (CFPS)
You're given the following details of an acquisition of Target Co. by Acquirer Ltd.. What is the pro forma FY+1 cash flow per share (CFPS) accretion/dilution for Acquirer Ltd.? Assume that the pro forma share price for Acquirer Ltd. is equal to its standalone price. Also, assume that equity raised by Acquirer Ltd. in the public markets.
Acquisition of Target Co. by Acquirer Ltd. | ||
Acquisition Structure Assumptions |
|
|
Acquisition Premium | 15% | |
Equity Issuance Discount (to Current Price) | 6% | |
Debt Financing | 35% | $15,014 |
Equity Financing | 65% | $27,883 |
|
|
|
Acquirer and Target Assumptions |
|
|
Acquirer Ltd. | Target Co. | |
Acquirer | Target | |
Share Price ($/sh.) | $2,169.58 | $31.00 |
Fully Diluted Shares Outstanding (MM) | 362 | 1,213 |
Net Debt | $46,818 | ($347) |
FY + 1 Normalized Net Earnings | $16,581 | ($406) |
FY + 1 Normalized Cash Flow | $48,877 | $233 |
|
|
|
Pro Forma Adjustment |
|
|
FY + 1 Normalized Net Earnings | $1,870 | |
FY + 1 Normalized Cash Flow | $449 | |
Pro Forma Net Debt | $59,916 |
Review Later
-2.75%
+1.40%
-2.08%
-2.29%
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started