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6 months later, the company is increasing its stake in the target from 40% to 60%.
The announcement read:
"The increased stake will take effect following a share capital increase, which will see the conversion of a portion amounting to US$15.5m of share premium reserve held by target into 15.5mn shares in target to be issued to the Group. Following the share capital increase, the Group intends to fully support target’s business development plan and finance its development over the next three years."
So my question is how to calculate the new deal value if it deviates from the original 300mn in 6 months ago.
What I tried:
method 1:
use the share capital increase amount US15.5 / 20% = 77.5mn
then this means the deal value declined from 300mn to 77.5mn
method 2:
since the target has issued more shares to raise company stake from 40% to 60%.
So I solve the share capital increase as a plug number to see how much share capital need to issue to the company to reach 60% stake. The plug number i get is 150m.
if the share capital increase is 150 represent 20% stake, then 150 / 20%, the new equity value is 750m - doubled from 6 months ago.
So I don't think both calculation for new equity value is right. Thanks for your help in advance Read More