notes P79 Synergy benefit example 4

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May 21, 2017 at 7:49 pm #387321
helensqq
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Hi John,

Ba was calculated with weighted Ba from both companies. but when you calculate Be you only use Nairobi’s equity and debt exclude Delhi’s, why? Shouldn’t it be enlarged company with both equities?

0.87=225/225+80(1-30%).

Again when you calculate WACC, you only use Nariobi’s data.

Thanks.
May 21, 2017 at 7:59 pm #387327
John Moffat
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No – the new company will only have Nairobi’s equity (Delhi will no longer exist 🙂 ) and the only debt will be that of Nairobi.
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