a. Hoylake’s expenses were expected to be 1.5% of the total value of the acquisition and 3% of subsequent breakup proceeds. What return would the Hoylake group expect to realize assuming it would be able to exit the transaction via sales, spin-offs, and public offerings within a year? Disposals would generate between £2 and £3.5 billion of capital gains depending on the breakup proceeds, taxable at the corporate level at a 40% rate.

Note that the operation of the tobacco business during that year was expected to generate

£1.077 billion of free-cash flow.