You are leading a team on a M&A deal. Suddenly your analyst has disappeared and you have the following unfinished spreadsheet. The acquirer and the target are assumed to have zero growth. Now it is up to you to finish this job. You also believe that the tax rate will be 20% when this merger closes, so you are using 20% as the corporate tax rate in this calculation.

?1? is ________

?2? is _________

?3? is __________

The synergy of this merger is _______

The maximum offer you can make is ________

Acquirer Target Combined Sales 500 120 620 Operating Expenses 200 60 260 Annual cost savings 30 EBIT 300 60 71? EBIT(1 t) 240 48 ??? Depreciation 40 20 ??? 30 40 ??? Gross Plant & Equipment 10 5 ??? Change in Working Capital 240 23 ?2? Free Cash Flow to Firm Discount rate 8.0096 996 896 Firm Value 3000 255.56 ??? Long term debt 1200 100 1300 Equity value 1800 155.56 ?3