Acquisition problem solution - Accy 510 M&A Accounting...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Accy 510 Ralcorp, a large store-brand cereal producer, purchased the assets and assumed certain liabilities of Post brand cereals from Kraft Foods effective on the 4 th of August, 2008. Ralcorp issued $1,888 million of its own stock (valued at $58.70 per share for purposes of the transaction) in exchange for the Post assets and liabilities. (The actual transaction wasn’t this simple. We’ll assume this as a ‘base case’.) The Post assets and liabilities involved in the deal were: Book value Fair value Cash $ 73 mil $ 73 mil Accounts receivable 3 mil 3 mil Inventories 83 mil 104 mil Property, plant and equipment 425 mil 470 mil Other intangible assets 1,158 mil 947 mil Total assets $1,742 mil $1,597 mil Current liabilities $ 17 mil $ 17 mil Long-term debt 965 mil 965 mil Deferred tax liability 77 mil 448 mil Other liabilities 74 mil 74 mil Total recorded liabilities $1,133 mil $1,504 mil Requirements : 1) Model the transaction described above: Who are the transactors? What did each transactor give up and receive in the transaction? How does this transaction differ from The transactors for this problem are Kraft and Ralcorp; they are directly transacting with each other for Post. Kraft gives up the assets and liabilities of Post in exchange for Ralcorp stock. Ralcorp gives up the proceeds from the stock issue in exchange for the assets and liabilities of
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

Acquisition problem solution - Accy 510 M&A Accounting...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online