Kunla Ltd and Cann Ltd intend to merge. The following were observed just before the merger announcement.

	Kunla Ltd	Cann Ltd
Market price per share	GH 400	GH 200
Number of shares	2,000,000	1,000,000
Market value of firm	GH 800,000,000	GH 200,000,000

The proposed merger will create GH50,000,000 in synergies. Kunla Ltd intends to pay GH 130,000,000 cash for Cann Ltd.

What is the cost of the merger to Kunla Ltd?

Compute the NPV of the merger.

The managers of these firms have proposed to merge to diversify their activities and to reduce risk. Should you pay a premium for the merged firm?

What convincing reasons can these managers give for the proposed merger?

What roles do investment banks play in facilitating M&A deals?