Estimate the value of the synergy in this merger

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Reference no: EM133649994

You have been asked to assess whether a merger makes sense and have collected the following information on the acquiring company, the target company and the combined company, with what you believe are likely changes after the merger. The information is provided below:

1. Estimate the value of the synergy in this merger.

2. How would your assessment of the value of synergy change, if you were told that the integration will take 5 years and that you will therefore have to wait that long before synergy manifests itself.

3. As a final consideration, assume that you could write up the fixed assets of the combined firm by $ 100 million after the merger, and that you can depreciate this additional amount over 5 years, using straight line depreciation. If the marginal tax rate is 40% for all firms, estimate the additional value created by this write-up.

Reference no: EM133649994

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