GBE Inc. is analyzing the possible acquisition of AWA Media Inc. Neither company has debt. The financial analyst of GBE has collected the following information: GBE AWA Pre-merger stock price $42 $20 Number of shares outstanding 12 million 8 million GBE and AWA have agreed on a transaction value of $24 per share for AWAs stock, but are negotiating methods of payment: an all-cash offer, and a stock exchange offer. GBE estimates the acquisition will increase its total after-tax annual cash flows by $7.6 million indefinitely. The appropriate discount rate for the incremental cash flows is 10 percent. a. What is the synergy from the acquisition? Calculate the takeover premium of each alternative. (9 marks) b. Calculate the NPV of each alternative. (2 marks) c. Assume the synergy is re-estimated to be $80million based on the recent market information. What is the maximum cash price per share that could be paid for AWA? (2 marks) d. Assume the synergy remains to be $80million. Calculate the takeover premium for a cash and stock exchange offer ($6.5 cash per share of AWA plus 0.35 shares of GBE per share of AWA). (4 marks) e. Name and describe two pre-offer and two post-offer defensive tactics. (3 marks)