hard · Investment Banking
NovaCorp is acquiring TargetCo in an all-stock deal. NovaCorp trades at a P/E of 18.0x, and TargetCo is being acquired at a P/E of 22.0x. NovaCorp expects to achieve pre-tax synergies equal to 10% of TargetCo's pre-acquisition Net Income. Assume a 30% tax rate and no other adjustments.
Is the deal accretive or dilutive?
- Dilutive
- Accretive because synergies exceed the tax rate
- Accretive
- Neutral
Sign up free to see the explanation and track your rank →
More Investment Banking practice
- What is the Multiple on Invested Capital (MOIC)?
- What is the control premium?
- Which valuation methodology would likely produce the 'floor' valuation for a mature indust
- Which of the following changes, held in isolation, would most likely achieve this?
- What is the Multiple on Invested Capital (MOIC)?
- If a company has an Unlevered Free Cash Flow (UFCF) of $500 million in Year 5, a WACC of 1
- What is the 3-year Compound Annual Growth Rate (CAGR)?
- If a company's Net Debt is negative, what is the relationship between its Equity Value and