M&A & Merger Models
All-stock deal, no synergies: acquirer EPS 4.00 on 100 shares (NI 400), target NI 100 acquired for 1,500 of acquirer stock at price 40. Compute pro forma EPS and accretion/dilution.
Model answer
New shares = 1,500 / 40 = 37.5. Pro forma shares = 100 + 37.5 = 137.5. Pro forma NI = 400 + 100 = 500. Pro forma EPS = 500 / 137.5 = 3.636. Accretion/dilution = 3.636 / 4.00 - 1 =…
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