Yes that's right. The transaction is better looked at as an acquisition of sorts rather than an expense. MFG is "buying" FUM for the cost of the discount on issue. As that "cost" is a much lower multiple of future earnings of the FUM than the current PE of the whole company, it should lead to additional shareholder value being created.
MFG is paying say an earnings multiple of 5-6 for this new FUM but will be valued at PE of anywhere from 18-22.
Smart transaction if you ask me.
MFG Price at posting:
$44.99 Sentiment: Hold Disclosure: Held
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