|Answers are required in all light red-shaded boxes.|
|Book Value||Mkt Value||Book Value||Mkt Value|
|Goodwill||– 0||– 0||– 0||– 0|
|Total Assets||2,250,000||4,340,000||10,300,000||9,150,000||– 0|
|Total Liabilities and Equity||2,250,000||4,340,000||10,300,000||9,150,000||– 0|
|Interest Rate on Debt pre-tax||8.0%|
|Tax Rate for both||25.0%|
|1. Assume Buyer is acquiring Target, financed with 80% debt and 20% stock. The stock prices shown above|
|are the prices involved (i.e., the buyer’s stock at time of deal is $40 and they are paying $40/share for the target).|
|The deal is closing on 12/31/18. Interest rate and tax rate assumptions are shown above.|
|Shares outstanding and 2019 Estimated standalone EPS are given above.|
|Calculate the 2019E EPS of the combined entity. Assume zero synergies.|
|2. What amount of pre-tax synergies are required to make the combined|
|EPS break-even? If the deal is already break-even or accretive, you can answer “n/a.”|
|Pre-Tax to Breakeven =|
|3. Fill in the combined pro-forma Balance sheet at 12/31/18 for the new Buyer company|
|Include the new number of Buyer shares outstanding after the close.||See Above Red Boxes within H9-H29 range|
|4. Fill in the boxes for the cash portion per share and the exchange ratio of the deal (red boxes):||You would say this deal is structured as:|
|shares of Buyer per share of Target|
|5. What is the Pro Forma Debt/Capitalization Ratio for NewCo?|
|6. What percentage of NewCo does Buyer control?|
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