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hi sir
in this question
why are the synergy benefits assumed to accrue only in share for share exchange and not the other 2 methods while others are also forms of acquisition?
and also ive been trying to come up with the synergy value $5.625 m but my answer isnt matching
isnt it that synergy should be the difference between the current value of new enlarged company and the value of the acquiring company. which is the amount worth paying for the acquisition.(ch16 pg 75 OT notes).
so i tried to calculate using this concept. but my value isnt coming as 5.625. please could you guide.
thanks alot.
Synergy benefits will accrue however the takeover is paid for, but they benefit the share price of Sigra. So if the offer is cash or bonds then Dentro shareholders will just receive the cash of the bonds – the fact that Sigras share price increases does not affect them because they are not receiving any shares.
I think you have misread the answer – the synergy benefit is not 5.625M, it is 1.688M.
5.625M is the current value of the shares in Dentro.
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