DEFINITION OF 'ACCRETIVE ACQUISITION' An acquisit
Post# of 30065
Posted On: 11/19/2014 9:49:39 PM
DEFINITION OF 'ACCRETIVE ACQUISITION'
An acquisition that will increase the acquiring company's earnings per share (EPS). These acquisitions tend to be favorable for the company's market price because the price paid by the acquiring firm is lower than the boost the new acquisition will provide to the acquiring company's EPS.
"Plugging those numbers into a calculator gives us a fair-value today of $37 million; only Amarantus will require an estimated $7 million to complete the Phase 2a program and tech-transfer. The potential is there for non-dilutive capital through a new DOD grant, but until the money has been secured, we can only suspect that Amarantus will need to raise these funds themselves. So net-net, ESS looks to be worth around $30 million.
Not bad considering Amarantus paid $11.2 million (+ $5 million in potential milestones). To raise $11.2 million at $0.08 per share, Amarantus would have to issue 140 million shares. If we divide $30 million in value by 140 million shares, we get ESS worth approximately $0.21 per share. Amarantus stock is at $0.08 per share. As such, the previous rudimentary analysis tells us this is a potential accretive transaction. The key value-creating events for investors will be: 1) securing additional DOD funding, and 2) data from the Phase 2a study."
An acquisition that will increase the acquiring company's earnings per share (EPS). These acquisitions tend to be favorable for the company's market price because the price paid by the acquiring firm is lower than the boost the new acquisition will provide to the acquiring company's EPS.
"Plugging those numbers into a calculator gives us a fair-value today of $37 million; only Amarantus will require an estimated $7 million to complete the Phase 2a program and tech-transfer. The potential is there for non-dilutive capital through a new DOD grant, but until the money has been secured, we can only suspect that Amarantus will need to raise these funds themselves. So net-net, ESS looks to be worth around $30 million.
Not bad considering Amarantus paid $11.2 million (+ $5 million in potential milestones). To raise $11.2 million at $0.08 per share, Amarantus would have to issue 140 million shares. If we divide $30 million in value by 140 million shares, we get ESS worth approximately $0.21 per share. Amarantus stock is at $0.08 per share. As such, the previous rudimentary analysis tells us this is a potential accretive transaction. The key value-creating events for investors will be: 1) securing additional DOD funding, and 2) data from the Phase 2a study."
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