Lecture Notes Chap 16 M&A Example 2

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November 11, 2012 at 5:25 am #55183
ferrischan
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Hi John, why is it that in this example when we regear to the new company capital structure, the equity is remaining at 170 instead of the combined equity of 225?
Also for the cash flow, how come the answer is not having the sum of Nairobi and Delhi before discounting? Please kindly advise. Thanks.
November 11, 2012 at 8:09 pm #106982
John Moffat
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The equity does not remain at 170 – it changes to 175 (and debt appears as well).
So the total long term capital changes to 257.
This is more than the combined value because of the synergistic benefits.
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