•Google is targeting to acquire Motorola.

Following are the available information

Key Information Acquirer Target

Current Share Price $750 $25
Shares Outstanding 310,000,000 315,000,000
Forecasted EPS $25 $2
Tax Rate 40%

Offer price $40

Offer premium 60%
Offer value $12,600,000,000

Aditional shares to be issued 8,400,000.00

Total diluted shares outstanding 318,400,000.00

Acquirer/ Google Target/Motorola

stand alone earning after tax $7,750,000,000.00 $630,000,000.00
standalone earning before tax $12,916,666,666.67 $1,050,000,000.00

Proforma statement
Particulars Google/Acquirer
pro forma earning $ 13,966,666,666.67
add: synergies $ 100,000,000.00
less:
interest fee $ (315,000,000.00)
amortization of financing fee $ (200,000.00)
deal fee $ (500,000.00)
depreciation on asset write up $ (500,000.00)
earning before tax $ 13,750,466,666.67
less: taxes $ (5,500,186,666.67)
Earning after tax $ 8,250,280,000.00
Diluted shares outstanding $ 318,400,000
Pro forma EPS $ 25.91
Accretion $ 0.91
Accretion 3.65%

Calculate the Accretion / Dilution per share and do the sensitivity calculation at offer price $30, $40 and $50 and at
0%, 50% and 100% stock deal
Stock deal
$0.91 0%
$ 30.00
Offer price $ 40.00
 Offer price
$ 50.00

•Loan Available for – 5 years and @ 5% p.a.

•Financing fees 2000000
•Synergies 100000000
•Deal Fees - 500000
•Assets Useful (years) 10
Deal structure 50-50% and offered prce is $40
 Deal structure

Consideration Mix
Stock 50%
Cash 50%

New debt
New debt issued $6,300,000,000 * assumed that 50% cash is paid thro
Loan term 10
Interest rate 5%
Interest expense on new debt $315,000,000

Financing fees 2000000

Amortization of financing fees 200000

Deal fees 500000 *Assumed deal fee is expensed durin

Synergy 100000000

Fair value 25000000

Book value 20000000
Asset write up 5000000
Depreciation on asset write up 500000

The EPS after the acquisition has increased by $0.91 indicating

accretion by 3.65% which means the deal is profitable for Google.

at offer price $30, $40 and $50 and at

Stock deal
50% 100%
sumed that 50% cash is paid through debt issue.

sumed deal fee is expensed during the same year