Question

Calculate the transaction value (in $ thousands) of a theoretical company based on the information provided below. Current Share Price $18.00 Shares Outstanding (Thousands) 5,000 Total Debt ($ Thousands) $3,700 Cash ($ Thousands) $2,100 Acquisition Premium 10% Review Later $82,600 $115,700 $97,600 $100,600

Answer 1

Answer:

The Transaction Value (in $ thousands) is:

= $97,240

Explanation:

a) Data and Calculations:

Current Share Price $18.00

Shares Outstanding (Thousands) 5,000

Total market value = $90,000 ($18 * 5,000)

Total Debt ($ Thousands) $3,700

Cash ($ Thousands) $2,100

Net liability = $1,600 ($3,700 - $2,100)

Net fair value = $88,400

Acquisition Premium 10%

Premium = $8,840 ($88,400 * 10%)

Acquisition or Transaction value = $97,240 ($88,00 * 1.1)

b) The transaction value is the acquisition value of the theoretical company.