1. Using the data given below, calculate fully diluted shares. Assume the firm uses proceeds received from the conversion of options to common shares to repurchase as many of these new shares as possible. Calculating Fully Diluted Shares Outstanding $Million, except per share data, shares in millions
Current Share Price $35.00
Basic Shares Outstanding 157.00
Options that can be Exercised 35.0
Weighted Average Exercise Price $18.00
Find total shares outstanding (basic shares plus new option shares).
2. What is the fully diluted offer price (equity value) for a tender offer made to acquire a target whose pre-tender shares are trading for $1.62 per share? The tender offer includes a 25% premium to the target’s pre-tender share price. The target has basic shares outstanding of 85 million and 5 million options which may be converted into common shares at $1.85 per share?