You are a senior Vice President of a consultancy firm that has been called in to advise Bidder Ltd on its proposed acquisition of ASX listed company Target Ltd. You instruct your newly 2 recruited analyst to gather the relevant information you will need to advise the board on the viability of the deal. Your analyst provides you with the following information:

You are a senior Vice President of a consultancy firm that has been called in to advise Bidder Ltd on its proposed acquisition of ASX listed company Target Ltd. You instruct your newly 1 recruited analyst to gather the relevant information you will need to advise the board on the viability of the deal. Your analyst provides you with the following information: Share price and number of shares on issue: Bidder Ltd Target Ltd Share price $4 $2.40 100 million Number of shares on issue 8 million . o o Synergies from the deal: Revenue synergies of $900,000 per annum (at year end) for the next 5 years The sale of a corporate jet in 2 year's time for $2m Cost savings of $300,000 per annum (at year end) for the next 5 years The relevant discount rate for all estimates is 12% per annum. (a) Estimate the value of the gain from the acquisition. (b) Given the information provided above, how many shares in Bidder Ltd would need to be offered for each share in Target Ltd for the gain from the acquisition to be shared equally such that 50% of the gain goes to Bidder Ltd shareholders and 50% to Target Ltd shareholders