M&A Case Study - Ownership Analysis
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How to calculate the ownership structure of the combined company after an all-share merger and acquisition deal, using the example of Coca-Cola acquiring Monster Beverage.
Glossary
Dilution M&A Merger ownership structureTranscript
Another issue we need to consider in an M&A transaction is that the ownership post deal. In this case, if I take a look at the acquirer's shares outstanding pre-deal, what I want to do is see how many shares they had and I can go right up to their information at the top and I can get their diluted shares outstanding. Then I want to do is I want to add the new shares that have been issued and we can just get that from the additional shares issued from the accretion dilution. The new shares issued. About a billion new shares, so the proforma shares is just the sum of those two, and it's quite useful just to see this, these shareholdings as a percentage of the pro forma. And the reason for that is that we want to know as a acquirer whether we lose control of the combined business. Now in this case, obviously there's no worry about losing control because Coca-Cola is such a big company. The existing Coca-Cola shareholders own or retain 80% of the combined business post deal. So that's quite important in an all share deal.