Merger Model Question
Can someone help me out with these questions for interview prep please?
Say you were to acquire to a company with a 10x PE ratio. Instead of using issuing stock, however, you decide to finance the acquisition using all debt with an interest rate of 10%. Is the deal accretive, dilutive or neutral?
If company A is trading at 9x and company B is trading at 6x should company A buy company B. Then they will ask if it's Accretive or dilutive.
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