Using the exam handout, assume Conglomerate Co wants to dive…
Using the exam handout, assume Conglomerate Co wants to divest Division C and buy Target A at the same time. Assume the cash proceeds Conglomerate Co gets from selling Division C exactly matches the cash required to purchase Target A in an all-cash transaction. What is the cash EPS accretion / (dilution) from the divestiture of Division C and the purchase of Target A in CY 2028 assuming all synergies are fully realized by then? Utilize the following assumptions in your analysis: Target A’s debt is fully retired in the transaction, there are no dis-synergies to Conglomerate Co from divesting Division C, there are cost synergies of 10% of Target A’s 2025A sales, a 25% tax rate, Conglomerate Co’s fully diluted share count is 66 in CY 2028, and ignore any loss of interest income from the cash proceeds for selling Division C.