EPS ACCRETION AND DILUTION

In order to understand the effect of the merger on the price of Google shares, an
attempt is made to analyze the Earnings per Share for the next 4 years. The above
analysis is derived by the pro forma income statement (prepared via purchase
accounting in case of stock for stock deal). The results of the same is given below
Consolidat
ed
Accretion (Dilution) in Buyer's EPS
and CEPS
EPS without the acquisition
EPS after the acquisition
EPS accretion/(dilution) by year
CEPS without the acquisition
CEPS after the acquisition
CEPS accretion (dilution) by year

28.90
28.90
0.02%

Forecasted
2012
37.22
39.88
7.14%

2013
44.76
47.96
7.15%

2014
51.54
54.46
5.67%

37.22
41.29
10.94
%

44.76
49.37
10.30
%

51.54
56.91
10.42
%

28.90
28.90
0.02%

EPS Accretion and Dilution

60.00
50.00
40.00
30.00
20.00
10.00
2012
EPS without the acquis ition

2013
EPS after the acquis ition

2014
CEPS after the acquis ition

From the above figures it can be seen that the Earnings per Share post the
acquisition is stated to grow in the coming 3 years (according to the projected

financial statements). The accretion in Earnings per Share is stated to be in the

range of 5.5% to 7.2% and the same in the Cash Earnings Per Share should be in
the range of 10.5% to 11%. Thus getting the votes from the shareholders as well as
the top management regarding the acquisition of the selected target should not be
difficult.