In Feb $2019,$ Haddock announced that it was acquiring its smaller rival Thompson, citing operational synergies as the reason for the merger. On the announcement of the merger, Haddock$$s stock price dropped from $$54\mathrm{.}80$ to $$52\mathrm{.}50$ while Thompson$$s price went up from $$31$ to $$37\mathrm{.}50.$ At the time of the announcement, Haddock had $400$ million shares outstanding and Thompson had $50$ million shares outstanding. Neither firm has any debt.

a$.$ Using the stock price data above, estimate the value that the stock market is attaching to synergies from this merger. Is the market expecting the merger to be value enhancing $($i$.$e$.,$ are merger synergies expected to be positive?

b$.$ You are doubtful about the accuracy of the $$54\mathrm{.}80$ pre$-$announcement stock price of Haddock. You suspect that Haddock may have been slightly overvalued prior to the merger announcement. However, you are reasonably confident that all other stock market data quoted above reflect fair value. Using the following data calculate the $$correct$$ pre$-$announcement value for Haddock and provide your own estimate of synergies from the merger.

Prior to the merger announcement Haddock had:

$$ EBIT $(1-$T$)$ equal to $$1\mathrm{.}5$ billion

$$ Net capital expenditures $($i$.$e$.$ Capex less depreciation$)$ of $200$ million

$$ Working capital investment $($i$.$e$.$ changes$)$ equal to $300$ million

$$ Cash balance of $$150$ million

$$ WACC of $10\%$ and a long$-$term growth rate of $5\%$

$$ Assume Haddock is in a stable growth phase.

Please provide in Excel sheet with formula$$s