Question
Zieglar (z) makes a share exchange offer for michal (M), exchange ratio: 1. Prior to the bid, both companies had EPS of $0.10, $30m shares,
Zieglar (z) makes a share exchange offer for michal (M), exchange ratio:
1. Prior to the bid, both companies had EPS of $0.10, $30m shares, and net after-tax income (NI) for ordinary shareholders of $3m.
A’s NI is expected to grow at 20%, M’s NI is expected to grow at 10%.
I. Determine earnings dilution in the five years following the acquisition.
II. Calculate the maximum number of M’s share to issue to avoid dilution.
Step by Step Solution
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Step: 1
I Earnings dilution in the five years following the acquisition can be calculated by determining the amount of diluted earnings per share given the ex...
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Intermediate Accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson
6th edition
978-0077328894, 71313974, 9780077395810, 77328892, 9780071313971, 77395816, 978-0077400163
