Takeover Premium Calculator

✖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.ⓘ Price Paid for Target Company [PT]			+10% -10%
✖Pre Merger Value of Target Company refers to its estimated worth or valuation before any merger or acquisition negotiations or discussions take place.ⓘ Pre Merger Value of Target Company [VT]			+10% -10%

✖Takeover Premium refers to the amount by which the acquiring company offers to pay for the target company shares above their current market price.ⓘ Takeover Premium [TPM]

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Formula

✖

Takeover Premium

Formula

`"TPM" = "PT"-"VT"`

Example

`"5010"="10000"-"4990"`

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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)

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Credits

Created by Aashna

IGNOU (IGNOU), India

Aashna has created this Calculator and 50+ more calculators!

Verified by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

Vishnu K has verified this Calculator and 200+ more calculators!

< 10+ Mergers and Acquisitions Calculators

Post Merger Value of Merged Company

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

Goodwill

Go Goodwill = Consideration Paid+Fair Value of Non Controlling Interest+Fair Value of Equity Previous Interest-Fair Value of Net Assets Recognized

Accretion Amount

Go Accretion Amount = ((Purchase Basis)*(Yield to Maturity/Accrual Period Per Year))-Coupon Interest

Gain of Acquirer

Go Gain of the Acquirer = Synergies Generated-(Price Paid for Target Company-Pre Merger Value of Target Company)

Post Merger EPS

Go Post Merger Eps = Total Earnings of the Acquirer Post Merger/Total Number of Shares of Acquirer

Control Premium

Go Control Premium = (Takeover Price-Market Price)/Estimated Price

Post Merger Share Price of Acquirer

Go Post Merger Share Price of Acquirer = Acquirer Pre Merger PE Ratio*Acquirer Post Merger Eps

Takeover Premium

Go Takeover Premium = Price Paid for Target Company-Pre Merger Value of Target Company

Post Merger PE

Go Post Merger Pe = Weighted Average Eps of Acquirer+Weighted Average Eps of Target

Merger Arbitrage Spread

Go Merger Arbitrage Spread = Risk Premium+Risk Free Rate

Takeover Premium Formula

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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