On 30 October 2012, it was publicly announced that Disney (DIS), a listed large global media and entertainment company. would acquire Lucasfilm in a 50% cash and 50% scrip deal. This would see 40 million new shares in DIS issued. Lucasfilm is a private company, wholly owned by founder. George Lucas. As an independent company, Lucasfilm is expected to generate $100 million every year from various royalty and production fees, and an extra free cash flow of $400 million in years it produces a movie. On average, Lucasfilm produces a movie every five years, and this schedule is not expected to be affected by the acquisition, with the next release. planned for 2015. The beta on DIS is 1.15, the risk-free rate is 3%, and the corporate tax rate is 30%. DIS shares closed at $49.12 after the announcement. Assume both companies face a cost of capital of 5% over the risk-free rate and long-term growth rate of 0%. 1. Estimate a standalone value for the target, stating all necessary assumptions: 2. What is the total value of the deal on the announcement date? 3. Using your answers in (a) and (b), calculate the breakeven value of synergies in this deal, How does your estimate of synergy value change if you factor in a 10\% control premium? 4. What is voting dilution risk? Describe how it could exist in this transaction