Is it possible to solve the following questions with the information provided below them or if not, what is still needed?

Question: Re-evaluate the SM M&A deal value with and without the operative synergies using the target capital structure with 65% D/V-ratio (raising regular bond market financing) using three valuation methods:

1. WACC -method

2. Adjusted Present Value -method

3. Free Cash Flow to Equity -method

A company FCG is planning on possible acquisition of company SM which would offer sales and cost synergies for both. The unlevered 100% equity capital structure of SM provides opportunities to utilize financial synergies as well.

Existing SM shareholders hold a total of 592 million shares. At a current pre-bid market price of 9.16 per share, the market capitalization of SM stands at 5422.7 MEUR. From the merger sales could increase by 5% per year and fixed production costs in SM cut by -2.5% from current level.

On top of the operative improvements, financial synergies could be exploited by levering up SM to a 65% target (market) Debt/Value-ratio from the current unlevered financial structure of the stand-alone SM. Debt raised is planned to be used to repurchase shares.

According to an estimation, a merger at a bid price corresponding to an EV/EBIT-multiple of 20.6 could be fair and attractive from the SM shareholders point of view given that the actual share price is now 9.16 per share corresponding to an EV/EBIT-multiple of 17.2 (= 592*9.16/315.8). The valuation multiple corresponds to an offer price of 11 per share, for 100% of SM stock. Total value of the bid is 592*11=6512 MEUR (EV/EBIT-multiple 6512/315.8 =20.6). Alternatively, FCG could offer SM shareholders the equivalent monetary amount paid in FCG stock instead of cash a stock rather than cash deal.

A risk analysis suggests that a market value-based target net Debt/Value-ratio of 65% is considered. This ratio is assumed to be maintained over time. The proceeds from all debt sales are used to repurchase shares, at fair market value. The financial leverage from 65% D/V ratio is expected to lead to SM bonds being rated in Moodys class A2 (see picture 1). The bonds expected loss rate to bond investors in the event of a default is estimated as 60%.