Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Thermo Fisher paid $76 per share for each outstanding share of Life Tech.What is the maximum offer price Thermo Fisher could have made without ceding

Thermo Fisher paid $76 per share for each outstanding share of Life Tech.What is the maximum offer price Thermo Fisher could have made without ceding all of the synergy value to Life Tech Shareholders?(Hint: Using the Transaction Summary Worksheet, increase the offer price until the NPV in the section entitled Valuation turns negative). Why does the offer price at which NPV turns negative represent the maximum offer price for Life Tech?

Thermo Fisher designed a capital structure for financing the deal that would retain its investment grade credit rating.To do so, it targeted a debt-to-total capital and interest coverage ratio consistent with the industry average for these credit ratios.What is the potential impact on Thermo Fishers ability to retain an investment grade credit rating if it has financed the takeover using 100% senior debt?Explain your answer.

Assuming Thermo Fisher would have been able to purchase the firm in a share for share exchange, what would have happened to the EPS in the first year?Explain your answer.

Mark Fisher, CEO of Thermo Fisher, asked rhetorically what if synergy were not realized as quickly and in the amount expected.How patients would shareholders be if the projected impact on earnings per share was not realized?Assume that the integration effort is far more challenging than anticipated and that the only one-fourth of the expected SG & A savings, margin improvement, and revenue synergy are realized.Furthermore, assume that actual integration expenses (shown on Newcos Assumptions Worksheet) due to the unanticipated need to updgrade and collocate research and development facilities and to transfer hundreds of staff are $150 million in 2014, $150 million in 2015, $100 million in 2016, and $50 million in 2017.The model output resulting from these assumption change is called the Impaired Integration Case.What is the impact on Thermo Fishers earnings per share (including Life Tech) and the NPV of the combined firms?

I also have a spreadsheet that i can provide with all the data needed, however not sure how to attach it. Please advise, response is needed by no later than tomorrow afternoon

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management Core Concepts

Authors: Raymond M Brooks

2nd edition

132671034, 978-0132671033

More Books

Students also viewed these Finance questions