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    Merger 1

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    Sajib Jahan
    Sacal is offering to acquire Gulf at a price of $70 per share. Based on Sacal's current earnings per share of $0.87 and shares outstanding, the combined company's earnings per share would be $1.34 for Sacal shareholders and $2.63 for Gulf shareholders. While Gulf's earnings per share would decrease from $5.54 currently to $2.63, the $70 offer price provides a premium over Gulf's current stock price of $43. The market price exchange ratio also slightly favors Gulf, giving shareholders little incentive to reject the acquisition offer.

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    Merger 1

    Uploaded by

    Sajib Jahan
    13 views2 pages
    Sacal is offering to acquire Gulf at a price of $70 per share. Based on Sacal's current earnings per share of $0.87 and shares outstanding, the combined company's earnings per share would be $1.34 for Sacal shareholders and $2.63 for Gulf shareholders. While Gulf's earnings per share would decrease from $5.54 currently to $2.63, the $70 offer price provides a premium over Gulf's current stock price of $43. The market price exchange ratio also slightly favors Gulf, giving shareholders little incentive to reject the acquisition offer.

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    Sacal is offering to acquire Gulf at a price of $70 per share. Based on Sacal's current earnings per share of $0.87 and shares outstanding, the combined company's earnings per share would be $1.34 for Sacal shareholders and $2.63 for Gulf shareholders. While Gulf's earnings per share would decrease from $5.54 currently to $2.63, the $70 offer price provides a premium over Gulf's current stock price of $43. The market price exchange ratio also slightly favors Gulf, giving shareholders little incentive to reject the acquisition offer.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    13 views2 pages

    Merger 1

    Uploaded by

    Sajib Jahan
    Sacal is offering to acquire Gulf at a price of $70 per share. Based on Sacal's current earnings per share of $0.87 and shares outstanding, the combined company's earnings per share would be $1.34 for Sacal shareholders and $2.63 for Gulf shareholders. While Gulf's earnings per share would decrease from $5.54 currently to $2.63, the $70 offer price provides a premium over Gulf's current stock price of $43. The market price exchange ratio also slightly favors Gulf, giving shareholders little incentive to reject the acquisition offer.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
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    Sacal Gulf present earnings ######## ######## offer price shares outstanding ######## ######## Sacal er share outstanding

    70 EPS 0.87 5.54 price per share 35.75 69.50 Price Convertion_Mkt price exibit_5 price/earning ratio 40.94 12.56

    surviving company Sacal final total earnings ######## exchange ratio 70/35.75 1.958042 shares outstanding* ######## new shares 1.958042*165300000 from exchange ######## EPS 1.341815 EPS of Gulf(post merger) 2.62733 1.958042*1.341815

    EPS historical Offer price Sacal Gulf 70 80 90 0.87 1.341815 1.297369 1.255773 5.54 2.62733 2.903203 3.161386

    shadowed areas are linked with offer price

    Gulf would not consider any bid below $70, this includes a considerable premium over the $43 CONCLUSION Sacal (acquiring company) will experience an INCREASE in EPS from $0.87 to $1.34 Gulf (acquired company) will experience an DECREASE in EPS from $5.54 to $ 2.63

    market price exchange ratio = (market price per share of acuiring company*number of shares offered)/market price per shar

    market price exchange ratio 1.007194 here this ratio is slightly greater than 1 this means Gulf has litle monetary incentive to accept the merger offer from the acuiring firm

    es offered)/market price per share of acquired company

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