medium · Investment Banking ma-lbo
Acquirer Corp (P/E = 15.0x) buys Target Inc (P/E = 20.0x) in an all-stock deal. Acquirer has 200M shares and Target has 50M shares.
Without synergies, which statement is true?
- The deal is dilutive to the Acquirer's EPS.
- The deal is break-even because no cash is leaving the balance sheet.
- The deal is accretive because the Acquirer has more shares outstanding.
- The deal is accretive because Target Inc is a smaller company.
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