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. The enterprise value (EV) of Alpha Motors and Omega Motors as separate entities is $500 mn and $100 mn respectively. These firms are financed
. The enterprise value (EV) of Alpha Motors and Omega Motors as separate entities is $500 mn and $100 mn respectively. These firms are financed 100% by equity. If Alpha Motors acquires Omega Motors, the merged Alpha-Omega Motors will have a combined value of $700. The board of Omega Motors has indicated that it will sell Omega Motors if it is offered $150 in cash. Should Alpha Motors acquire Omega Motors? Explain using the synergy or merger and the NPV of merger.
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