DROP DOWNS

1. 2.63, 6.07, 2.89, 3.76 per share

2. 88.70, 125.66, 110.88, 73.92 millions

3. 595.3, 366.34, 457.92, 686.88 millions

Consider the case of Lets Merge Co. and WhoMe Inc.: LetsMerge is targeting Whome for a potential friendly merger. Alter initial discussions with the management of WhoMe, Lets Merge 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 Whole's current market value of equity is $44.00 million. Based on projected cash Tlows in the pro-forma statements, analysts calculate that the post-merger value of operations will be equal to $52.80 million. What is the value of the synergistic benefits that the merger will bring to LetsMerge from Whome's operations? O $8.80 million 0 $13.20 million What is the most likely bidding strategy for LetsMerge Co.? O LetsMerge will negotiate a price between $52.80 million and $44.00 million LetsMerge will negotiate a price that is lower than $44.00 million, Now consider the following: Suppose LetsMerge Co. is also targeting another company, Yes You Inc., which has a current value of $84.00 million. Analysts conduct due diligence and estimate the post-merger value of Yes You's equity to be $92.40 million. Yes You has 32.00 million shares outstanding. If the merger analysts expect the synergies to be realized, the maximum price per share that lets Merge is likely to pay if it is making a cash affer for Yes You Inc. is LetsMerge has 48.00 million shares outstanding that are trading at $8.00 per share. Suppose LetsMerge makes an offer to acquire Yesyou at $2.31 per stare. If the deal goes through the post-merger value of Yes You to the lets Merge shareholders is The total value of the merged company's equity will be If LetsMerge wanted to issue stock for this meryer, how many new shares should Lets Merge issue so that Yes You's former stockholders will own 16.14% of the shares of the merged company? 9.24 million shares O 11.09 million shares 0 7.39 million shares O 5.54 million shares