Discount Rate for Target

I may be wrong - but just give a thought, based on the principle that we only use WACC when there is no change at the risk level and the gearing, that is when Bequity=Bassets....

Obviously JM, could guide us both correctly....

Depending on the information available, what you would want to do is get the asset beta for the target, then calculate an equity beta for the target (the gearing depending on how the acquisition is to be financed - probably you will need to assume the gearing of the acquirer is to stay the same) and then a WACC.