Issue of 109.3m new shares, or 2 new for every 7 old, with pre-emptive subscription rights

Number of shares before the capital increase:	382.6m
Issue price:	14
Eligibility date of new shares:	1 January 2009
Latest price:	27.75
Issue proceeds (gross):	1.5bn.

(a) Compare consolidated shareholders" equity (14.3bn) with the amount of the capital increase, the amount of the latter to market capitalization before the operation. What do you conclude?

(b) Calculate the real dilution entailed by the capital increase.

(c) Calculate the share that new shareholders will hold in the capital and the shareholders" equity of Saint Gobain.

(d) What is your conclusion?

Answer rating: 100% (QA)

Analysis of Saint Gobain Share Issue This scenario describes a share issuance by Saint Gobain where they issued 1093 million new shares representing 2 ... View the full answer