Evaluating the acquisition of a competitor

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Reference no: EM133113173

You're evaluating the acquisition of a competitor in your industry. The current market capitalization of the target is 125 M with a 2.5$ stock price. Following the acquisition you expect to generate incremental revenues of 10 M per year at a post acquisition COGS of 60%. You also expect the acquisitionto generate costs savings of 2.5 M per year. The offered price per share is 3.75 $ and the cost of capital is 12%. Determine whether you are offering a reasonable price.

Reference no: EM133113173

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