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Consider the case of LetsMerge Co . and WhoMe Inc.: LetsMerge is targeting WhoMe for a potential friendly merger. After initial discussions with the management
Consider the case of LetsMerge Co and WhoMe Inc.:
LetsMerge is targeting WhoMe for a potential friendly merger. After initial discussions with the management of WhoMe, LetsMerge sends a team of analysts, engineers, and advisers to evaluate expected synergistic benefits and to estimate the value of operations of WhoMe. This process is called due diligence.
The due diligence team submits a report stating that WhoMes current market value of equity is $ million. Based on projected cash flows in the proforma statements, analysts calculate that the postmerger value of operations will be equal to $ million.
What is the value of the synergistic benefits that the merger will bring to LetsMerge from WhoMes operations?
a $ million
b $ million
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