[yogendra]

In the Q3a
I think it should go like:
Value of acquiring co.= 50m shares × 6.5 = $325m
Fcfe of acquiring co.= $325m/8=$40.63m

Value of victim co. = 7(1+0.03)/(0.15-0.03) = $60m (using gordon growth model)
Fcfe of victim=$7m which is given

Value of combined =(40.63+7+5)*8=$421m

Gain in value = $421-(325+60)= 36m

Offer of 5 shares for 1 of victim gives 10m shares to victim.

Share value of new combined company= $421/(50+10) = $7.02

Gain by victim= $7.02*10m shares – $60m = $10.2m (17% gain)

Gain by acquirer=$7.02*50m shares – $325m = $26m (8% gain)

Anyone dome this.
Correct me if i m wrong.
Let me know if anyone has done it this way.

[Author]

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