medium · Investment Banking ma-lbo
In an Accretion/Dilution analysis, an acquirer with a 25.0x P/E acquires a target with a 20.0x P/E.
If the deal is 100% stock-for-stock, what is the 'breakeven' synergy required to avoid dilution?
- 0 in synergies are required; the deal is naturally accretive.
- The deal is naturally dilutive, requiring significant synergies.
- Synergies must equal the foregone interest on the cash used.
- Synergies must equal at least 5% of the target's Net Income.
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