Hello Sir,
While calculating Market value of Shares of Louieed Co under Cash offer, why cash paid to Tidded Co's shareholders is not being deducted?
It is calculated as : MV = 340m x $0.96 x 14 = $4569.6m;
where,
Shares = 340m
EPS after acquisition = $0.96
P/E ratio of Combined Company = 14
So, my doubt is that why didn't we deduct $1764 being paid to Tidded Co;s shareholders from this value of $4569.6m?
Thank you!
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Impact on Predator Company's Equity after Acquisition - Louieed Co (Mar/Jun 16)
4y ago
4y ago#1The EPS of $0.96 per share is calculated from the earnings which are not affected by the cash paid.
4y ago#2Why are the earnings not affected by the cash paid?
4y ago#3Cash paid is a capital transaction and will not affect the SOPL.
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