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I dont understand part d. Please expalin in simple steps

I dont understand part d. Please expalin in simple steps

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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I dont understand part d. Please expalin in simple steps 

1. Thermo Fisher ("Fisher") is considering an acquisition of Life Technologies ("Life Tech"). Life Tech shares currently trade at $60.75 per share with 179.3 million shares outstanding. Fisher estimates that the standalone value of Life Tech is $12,727.90 and the expected value of synergy created from the acquisition is $3,159.30. Fisher offers $85.05 for each Life Tech share. a. Does Fisher overpay for Life Tech? Answer: Target current market value = $10,892.48 Minimum price to offer = $12,727.90 Maximum price to offer = $15,887.20 Maximum price to offer per share= $88.61 > Offer price Fisher does not overpay for Life Tech. b. What is the premium implied by the offer price? Answer: Premium = 40% c. How much of the net synergy (in percentage) does Fisher pay to Life Tech shareholders? Answer: Fisher pays 79.81% of net synergy to Life Tech shareholders. d. Assume now that Fisher aims to pay 50% of net synergy to Life Tech shareholders? What will be the new offer price and the premium implied by this new price? Answer: Offer price = $79.80 Premium = 31.36%
Transcribed Image Text:1. Thermo Fisher ("Fisher") is considering an acquisition of Life Technologies ("Life Tech"). Life Tech shares currently trade at $60.75 per share with 179.3 million shares outstanding. Fisher estimates that the standalone value of Life Tech is $12,727.90 and the expected value of synergy created from the acquisition is $3,159.30. Fisher offers $85.05 for each Life Tech share. a. Does Fisher overpay for Life Tech? Answer: Target current market value = $10,892.48 Minimum price to offer = $12,727.90 Maximum price to offer = $15,887.20 Maximum price to offer per share= $88.61 > Offer price Fisher does not overpay for Life Tech. b. What is the premium implied by the offer price? Answer: Premium = 40% c. How much of the net synergy (in percentage) does Fisher pay to Life Tech shareholders? Answer: Fisher pays 79.81% of net synergy to Life Tech shareholders. d. Assume now that Fisher aims to pay 50% of net synergy to Life Tech shareholders? What will be the new offer price and the premium implied by this new price? Answer: Offer price = $79.80 Premium = 31.36%
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