What is the synergy worth? what is the maximum price novell can pay

In April 1994, Novell, Inc. announced its plan to acquire WordPerfect Corporation for

$1.4billion.

Atthetimeoftheacquisition,therelevantinformationaboutthetwo companies was as follows:

 

Novell

WordPerfect

Revenues

$1,200.00

$600.00

Costof Goods Sold (w/o Depreciation)

57.00%

75.00%

Depreciation

$42.00

$25.00

Tax Rate

35.00%

$25.00%

CapitalSpending

$75.00

$40.00

WorkingCapital(as%ofRevenue)

40.00%

30.00%

Beta

1.45

1.25

ExpectedGrowth Rate in Revenues/EBIT

25.00%

15.00%

ExpectedPeriod of High Growth

10years

10years

GrowthrateAfterHigh-GrowthPeriod

6.00%

6.00%

BetaAfterHigh-Growthperiod

1.10

1.10

Capital spending will be offset by depreciation after the high-growth period. Neither firm has any debt outstanding. The treasury bond rate is 7%.

a. Estimate the value of Novell, operating independently.

b. Estimate the value of WordPerfect, operating independently. c. Estimate the value of the combined firm, with no synergy.

d. As a result of the merger, the combined firm is expected to grow 24% a year for the high-growth period. Estimate the value of the combined firm with the higher growth.

e. Whatis thesynergyworth? Whatisthe maximumpriceNovell canpayfor WordPerfect?

Calculate your order
Pages (275 words)
Standard price: $0.00
Client Reviews
4.9
Sitejabber
4.6
Trustpilot
4.8
Our Guarantees
100% Confidentiality
Information about customers is confidential and never disclosed to third parties.
Original Writing
We complete all papers from scratch. You can get a plagiarism report.
Timely Delivery
No missed deadlines – 97% of assignments are completed in time.
Money Back
If you're confident that a writer didn't follow your order details, ask for a refund.

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
$0.00
Power up Your Academic Success with the
Team of Professionals. We’ve Got Your Back.
Power up Your Study Success with Experts We’ve Got Your Back.