medium · Investment Banking
Acquirer P (P/E = 12.0x) acquires Target Q (P/E = 8.0x). The deal is 100% stock.
Which of the following would most likely turn this deal from accretive to dilutive?
- A decrease in the Acquirer's share price before the deal closes.
- The target having a very low tax rate.
- Significant cost synergies of 10% of Target's operating expenses.
- A massive increase in the Target's purchase premium to 60%.
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