Company A: EBT $200M, 40M shares at $10, tax rate 50%. Company B: NI $20M. A buys B for 100% stock at a $100M transaction value. What pretax cost synergies are needed to break even?

Question

IBPrep · Accepted Answer

50. New shares issued = $100 / $10 = 10M, for 50M pro forma shares.

Company A: EBT $200M, 40M shares at $10, tax rate 50%. Company B: NI $20M. A buys B for 100% stock at a $100M transaction value. What pretax cost synergies are needed to break even?

Answer

More M&A interview questions

Company A: EBT $200M, 40M