Calculate the fully diluted shares outstanding for the following potential target company. The target company's shares are trading in the market at $8.00. The potential acquirer has modelled that they are willing to pay $13.50 per share in an acquisition. The target company has basic shares outstanding of 100 million. The target company has employee share options outstanding, as outlined in Figure 1. Stock Options Outstanding Stock Options Exercisable Options Number Outstanding Tranches in millions 5678 A W N 3 4 8 12 9 87 43 23 16 68 266 Weighted Average Exercise Price/Share 8.5 9.2 11.4 13.1 16.4 18.9 20.2 25.7 Number Outstanding in millions 2 4 7 71 36 15 14 47 196 Weighted Average Exercise Price/Share 8.6 9.1 11.9 12.4 16.55 18.61 20.6 25.4 Figure 1 The target also has convertible bonds, with the following note in its most recent financial statements: "the Company has outstanding $200 million of 5.25% convertible notes which are included in Long-term debt due within one year on the Company's Consolidated Balance Sheet. The notes are payable in cash at maturity unless holders exercise their option to convert the notes into shares of common stock. The initial conversion rate provided under the terms of the Notes is 85.4908 shares of common stock per $1.000 principal amount of notes."
Calculate the fully diluted shares outstanding for the following potential target company. The target company's shares are trading in the market at $8.00. The potential acquirer has modelled that they are willing to pay $13.50 per share in an acquisition. The target company has basic shares outstanding of 100 million. The target company has employee share options outstanding, as outlined in Figure 1. Stock Options Outstanding Stock Options Exercisable Options Number Outstanding Tranches in millions 5678 A W N 3 4 8 12 9 87 43 23 16 68 266 Weighted Average Exercise Price/Share 8.5 9.2 11.4 13.1 16.4 18.9 20.2 25.7 Number Outstanding in millions 2 4 7 71 36 15 14 47 196 Weighted Average Exercise Price/Share 8.6 9.1 11.9 12.4 16.55 18.61 20.6 25.4 Figure 1 The target also has convertible bonds, with the following note in its most recent financial statements: "the Company has outstanding $200 million of 5.25% convertible notes which are included in Long-term debt due within one year on the Company's Consolidated Balance Sheet. The notes are payable in cash at maturity unless holders exercise their option to convert the notes into shares of common stock. The initial conversion rate provided under the terms of the Notes is 85.4908 shares of common stock per $1.000 principal amount of notes."
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter11: Stockholders' Equity
Section: Chapter Questions
Problem 11.4DC
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Transcribed Image Text:Question 2
Calculate the fully diluted shares outstanding for the following potential target
company. The target company's shares are trading in the market at $8.00. The
potential acquirer has modelled that they are willing to pay $13.50 per share in an
acquisition. The target company has basic shares outstanding of 100 million. The
target company has employee share options outstanding, as outlined in Figure 1.
Stock Options Outstanding
Stock Options Exercisable
Options
Tranches
1
2
8656 AWN
3
4
7
Number Outstanding
in millions
8
12
9
87
43
23
16
68
266
Weighted Average
Exercise Price/Share
8.5
9.2
11.4
13.1
16.4
18.9
20.2
25.7
Number Outstanding
in millions
2
4
7
71
36
15
14
47
196
Weighted Average
Exercise Price/Share
8.6
9.1
11.9
12.4
16.55
18.61
20.6
25.4
Figure 1
The target also has convertible bonds, with the following note in its most recent
financial statements: "the Company has outstanding $200 million of 5.25%
convertible notes which are included in Long-term debt due within one year on
the Company's Consolidated Balance Sheet. The notes are payable in cash at
maturity unless holders exercise their option to convert the notes into shares of
common stock. The initial conversion rate provided under the terms of the Notes
is 85.4908 shares of common stock per $1,000 principal amount of notes."
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