medium · Private Equity pe-core
A public strategic buyer is acquiring a PE-backed company for $500 million in an all-cash deal.
If the buyer's cost of debt is 6% and the target's earnings yield is 10%, what is the likely impact on the buyer's Earnings Per Share (EPS)?
- The deal is likely accretive to EPS.
- The deal is likely dilutive to EPS.
- EPS will remain unchanged as it is a cash deal.
- Impact cannot be determined without the P/E ratio.
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