The information that I have indicates is that prior to the acquisition CBSL had 21,592,000 shares outstanding. With the acquisition scheduled to close in the third quarter, I assume the number of shares will increase by 7,200,000 which will then total 28,792,000.
According to information I have, CBSL is estimated to earn $.58 in fiscal year 1998 and $.78 in fiscal year 1999. In order for CBSL to meet these estimates, Claremont will have to contribute its share of net income to the extent that the amount offsets the cost of the acquisition, 7.2m shares or $285m. If Claremont's net income falls short, earnings for the combined companies will be lower. If Claremont's net income is sufficient to offset the cost of the acquisition, then perhaps the earnings estimates can be met and there is no earnings dilution. It may take some time for the combined companies net incomes to offset the cost of the purchase.
In order to calculate the earnings per share, you divide the net income by the outstanding number of shares. Had this purchase been made in cash instead of through CBSL stock, this would be a non issue and CBSL's stock price probably would not have gone down 3 pts yesterday.
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