Takeover Premium Solution

STEP 0: Pre-Calculation Summary
Formula Used
Takeover Premium = Price Paid for Target Company-Pre Merger Value of Target Company
TPM = PT-VT
This formula uses 3 Variables
Variables Used
Takeover Premium - Takeover Premium refers to the amount by which the acquiring company offers to pay for the target company shares above their current market price.
Price Paid for Target Company - Price Paid for Target Company refers to the total amount of money transferred from the acquiring company to the shareholders of the target company in exchange for their ownership stake.
Pre Merger Value of Target Company - Pre Merger Value of Target Company refers to its estimated worth or valuation before any merger or acquisition negotiations or discussions take place.
STEP 1: Convert Input(s) to Base Unit
Price Paid for Target Company: 10000 --> No Conversion Required
Pre Merger Value of Target Company: 4990 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
TPM = PT-VT --> 10000-4990
Evaluating ... ...
TPM = 5010
STEP 3: Convert Result to Output's Unit
5010 --> No Conversion Required
FINAL ANSWER
5010 <-- Takeover Premium
(Calculation completed in 00.004 seconds)

Credits

Creator Image
Created by Aashna
IGNOU (IGNOU), India
Aashna has created this Calculator and 100+ more calculators!
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Verified by Vishnu K
BMS College of Engineering (BMSCE), Bangalore
Vishnu K has verified this Calculator and 200+ more calculators!

Mergers and Acquisitions Calculators

Post Merger Value of Merged Company
​ LaTeX ​ Go Post Merger Value of Merged Company = Pre Merger Value of the Acquirer+Pre Merger Value of Target Company+Synergies Generated-Cash Paid to Shareholders
Accretion Amount
​ LaTeX ​ Go Accretion Amount = ((Purchase Basis)*(Yield to Maturity/Accrual Period Per Year))-Coupon Interest
Gain of Acquirer
​ LaTeX ​ Go Gain of the Acquirer = Synergies Generated-(Price Paid for Target Company-Pre Merger Value of Target Company)
Takeover Premium
​ LaTeX ​ Go Takeover Premium = Price Paid for Target Company-Pre Merger Value of Target Company

Takeover Premium Formula

​LaTeX ​Go
Takeover Premium = Price Paid for Target Company-Pre Merger Value of Target Company
TPM = PT-VT

What do you mean by Takeover Premium ?

Takeover Premium is the difference between the prices paid for the target company and the target company's pre-merger value. When a company decides to acquire another company, it typically offers a price per share that is higher than the current market price. This premium serves as an incentive for the shareholders of the target company to agree to the acquisition. It compensates them for giving up their ownership stake and any potential future benefits they might have received by holding onto their shares. The acquiring company may be willing to pay a higher premium if it believes that the target company's assets, technology, or market position will provide significant strategic benefits. If multiple companies are interested in acquiring the same target, it can increase up the premium as they compete to secure the deal. Economic conditions, industry trends, and market scenario can influence the level of the premium offered.

How to Calculate Takeover Premium?

Takeover Premium calculator uses Takeover Premium = Price Paid for Target Company-Pre Merger Value of Target Company to calculate the Takeover Premium, Takeover Premium is the difference between the market value (or estimated value) of the company and the actual price to acquire it. Takeover Premium is denoted by TPM symbol.

How to calculate Takeover Premium using this online calculator? To use this online calculator for Takeover Premium, enter Price Paid for Target Company (PT) & Pre Merger Value of Target Company (VT) and hit the calculate button. Here is how the Takeover Premium calculation can be explained with given input values -> 5000 = 10000-4990.

FAQ

What is Takeover Premium?
Takeover Premium is the difference between the market value (or estimated value) of the company and the actual price to acquire it and is represented as TPM = PT-VT or Takeover Premium = Price Paid for Target Company-Pre Merger Value of Target Company. Price Paid for Target Company refers to the total amount of money transferred from the acquiring company to the shareholders of the target company in exchange for their ownership stake & Pre Merger Value of Target Company refers to its estimated worth or valuation before any merger or acquisition negotiations or discussions take place.
How to calculate Takeover Premium?
Takeover Premium is the difference between the market value (or estimated value) of the company and the actual price to acquire it is calculated using Takeover Premium = Price Paid for Target Company-Pre Merger Value of Target Company. To calculate Takeover Premium, you need Price Paid for Target Company (PT) & Pre Merger Value of Target Company (VT). With our tool, you need to enter the respective value for Price Paid for Target Company & Pre Merger Value of Target Company and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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