Cash offer $155,000,000

2022 2023 2024 2025 2026

Sales $264,000,000 $300,000,000 $332,000,000 $356,000,000 $396,000,000

Production costs 185,000,000 210,000,000 232,400,000 249,200,000 277,200,000

Other expenses 26,400,000 30,400,000 32,800,000 36,000,000 39,200,000

Depreciation 21,600,000 24,800,000 26,400,000 28,700,000 28,800,000

EBIT $31,000,000 $34,800,000 $40,400,000 $42,100,000 $50,800,000

Interest 6,000,000 7,200,000 8,000,000 8,400,000 8,800,000

Taxable income $25,000,000 $27,600,000 $32,400,000 $33,700,000 $42,000,000

Taxes (21%) 5,250,000 5,796,000 6,804,000 7,077,000 8,820,000

Net income $19,750,000 $21,804,000 $25,596,000 $26,623,000 $33,180,000

Additions to retained earnings $- $12,800,000 $15,000,000 $17,000,000 $20,000,000

Dividends from Hybrid today $45,000,000

Stock price of acquirer $71.00

Shares outstanding in acquirer 14,000,000

Shares outstanding in target 6,400,000

Borrowing rate, Birdie and Hybrid 8%

Birdie WACC 11.00% (Assume target capital structure can be achieved after acquisition)

Hybrid WACC 12.40%

Hybrid cost of equity 16.90%

Terminal value of Hybrid in five years $190,000,000

Tax rate 21%