M&A Equations
90
% needed to avoid T SH vote
(Pro Forma Acquirer EPS - Pre Deal A's EPS) / A's Pre Deal EPS
Accretion / Dilution %
A's Pro forma EPS - A's Pre deal EPS
Accretion / Dilution (nominal)
FMV Acquirer
Acquiror Ownership in NEWCO
Dilution per share * FDSO
After-tax synergies necessary
Household
DE case sanctioning poison pill
Enterprise Value / LTM EBITDA
EBITDA Multiple
Net Income / Shares
EPS
Offer Price / Acquirer Share Price
Exchange Ratio
Equity Value + Debt - Cash
Transaction Enterprise Value
FDSO * Offer Price
Transaction Equity Value
Dilutive
Transaction P/E greater than A P/E
Accretive
Transaction P/E lower than A P/E
Shares Outstanding + Options - (#Options x Avg. price / Offer Price)
FDSO
T's NI / (T's NI + A's NI)
NI Contribution of T
Exchange Ratio * Target FDSO
New Shares Issues
Offer Price / EPS
P/E of Transaction
Annual pre tax synergy / (discount rate - perp growth rate)
PV of Pre tax synergy
tax shield / cost of equity
PV of tax shield
Dilution per share * FDSO / (1-tax rate)
Pre-tax synergies necessary
(Offer Price - Target Price ) / Target Price
Premium
New Shares Issues / (Acquirer FDSO + new Shares Issues)
Pro Forma Ownership for T
(FMV acquirer - A pro forma ownership * NEWCO value) / A pro forma ownership %
Required Synergies (plug)
((FMV assets - BMV assets) / Useful Life) * (1-tax rate)
Tax Effected Step up (calculation)
Deduction * 1-T
Tax Effective
Cash in transaction * IR on acquisition debt * (1-tax rate)
Tax effected Interest Expense
Write up of T's assets to FMV
Tax effected step-up (def'n)
