medium · Investment Banking ma-lbo
AlphaCorp, with a P/E of 20x, acquires BetaWorks, which has a P/E of 15x, in an all-stock transaction.
Without considering synergies or fees, how will this deal impact AlphaCorp's Earnings Per Share (EPS)?
- The deal will be dilutive because AlphaCorp must issue a large number of shares to BetaWorks holders.
- The deal will be dilutive because AlphaCorp is paying a premium for BetaWorks.
- The deal will be neutral as the market values of both companies will simply merge.
- The deal will be accretive because AlphaCorp is using high-value stock to buy 'cheaper' earnings.
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