Question 8 Part A:Gryffindor Footwear is considering acquiring Slytherin Shoes. Gryffindor's objective is to maximize shareholder value.Here is a summary of the forecasted financials this year for the two companies:

Gryffindor Footwear

Slytherin Shoes

Net Income (millions of $)

150

75

Shares Outstanding (millions of $)

30

5

EPS ($)

5

15

Preannouncement Share Price ($)

50

45

P/E

10

3

Assume that Gryffindor offers Slytherin shareholders $250 million in cash. The present value of all future synergies from the deal is forecasted to be $40 million. 1) Does it make sense for Gryffindor to proceed with the acquisition under these terms? 2) What would the percentage gain/loss be for both Gryffindor and Slytherin?