FIG (Banks & Insurance)
All-stock bank deal: the acquirer has 100M shares at $10.00 tangible book value per share, and issues 25M new shares at $18.00 ($450M) for a target with $150M of tangible common equity, creating $300M of goodwill and intangibles. Compute the TBV dilution.
Model answer
Acquirer tangible common equity = 100M × $10.00 = $1,000M. Pro forma TCE = $1,000M + $450M of stock issued − $300M of goodwill/intangibles created = $1,150M. Pro forma shares = 125M, so pro forma…
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