Problem:
Garth's Micro Brewery, whose shares are currently trading at $40 per share, is considering acquiring Wayne's Beer Bottling Co. You have compiled a group of comparable transactions within the beer bottling space and have calculated that since 2004, acquisitions similar (or comparable!) to the one Garth's is currently considering have had transaction values (offer value of target plus any target debt, net of cash) that are, on average, 8.0x target's EBITDA.
Wayne's shares currently trade at $34 per share
Wayne's has 50 million diluted shares outstanding
Wayne's LTM EBITDA was $250 million
Wayne's Net Debt was $200 million
What is the offer value per share and the offer premium?
1. $32.33 per share; -4.9%
2. $36.00 per share; 5.9%
3. $44.00 per share; 29.4%
4. $52.94 per share; 55.7%