a Acquirer firm plans to launch a takeover of Target firm. The manager of Acquirer...
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a Acquirer firm plans to launch a takeover of Target firm. The manager of Acquirer indicates that the deal will increase the free cash flow of the combined business by $13.6m per year forever. The beta of the combined firm is 1.2, market portfolio return is 12% and risk free interest rate is 4%. Firms Involved in the Takeover Acquirer Target Assets ($m) 6000 800 Debt ($m) 2000 300 Number of shares (m) 80 20 (i). Calculate the value of synergy of the deal. (6 marks) (ii). Calculate the offer price at which Acquirer shares the total synergy as in (i) equally with Target. (6 marks) Part B. Name and define two strategies that are commonly used in takeover defenses. (8 marks) Strategy 1 Strategy 2
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