Suppose that Fox Entertainment Group has just made an offer to acquire CKX, the firm that owns American Idol. Prior to the offer, CKX had 35 million shares outstanding that traded at a price of $30, and Fox had 40 million shares outstanding that traded at $45. As a result of the merger, Fox estimates that CKXs operations will generate an additional $70 million FCF a year (forever) via operational synergies. Assume that the r_a for Fox is 10% and the r_a for CKX is 15%. The proposed merger will not affect the riskiness or value of either companys existing debt.

Now suppose that another motivation for Foxs offer was to avoid letting One Equity Partners acquire CKX. If this happened, Fox suspected its own free cash flows would drop by about $20 million a year (forever). Given this, what is the most that Fox should now be willing to pay to complete its acquisition of CKX?