BuyerCo is offering $58.73 for each share of ValueCo common stock. BuyerCo’s current share price is $70.00, and ValueCo’s current share price of $43.50. Fully diluted shares outstanding of VaueCo is approximately 80 million. Meanwhile, ValueCo also has net debt of $1,250 million.
Sources of Funds for BuyerCo:
$2,200 million of term loan B
$1,500 million of senior notes
$300 million of cash on hand (including $50 million of existing BuyerCo cash)
Uses of Funds for BuyerCo:
Purchase of ValueCo’s equity for $4,700 million
Repayment of ValueCo’s existing $1,000 million term loan and
$500 million senior notes
Payment of total fees and expenses of $150 million, consisting of:
i. M&A advisory and other transaction fees of $40 million.
ii. debt financing fees of $90 million, and iii) tender/call premiums of $20 million
ValueCo’s approximate equity value is $3,500 million and existing goodwill is $1,000 million.
a. How much is the net identifiable asset for ValueCo?
b. How much goodwill will be created after the transaction?
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BuyerCo is offering $58.73 for each share of ValueCo common stock. BuyerCo’s current share price is...
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