Lucasfilm Ltd. owns the intellectual property rights to Star Wars. Lucasfilm, on its own, has the ability to create one film every three years (you may model this as 1/3 of a film each year). Disney acquired Lucasfilm in 2012. Under Disney ownership, one Star Wars film will be created every year.

Assume the following: each Star Wars film generates $500 million in nominal free cash flow; the first film to be released after the 2012 acquisition arrives one year later in 2013 (full for Disney, 1/3 of one for Lucasfilm standalone); under either owner, films will continue to be made forever; Lucasfilm activities will not impact any other lines of Disney business; the WACC for movie studios is 14%.

At the time of purchase, what is the value of the potential synergies generated by Disney's acquisition of Lucasfilm?

$566 million

$725 million

$1.04 billion

$2.38 billion

$4.67 billion