You are a profitable conglomerate thinking about getting into the gelati business by acquiring the firm Figo Gelati (FG). Current info for you, FG and their similar comp is listed below. You estimate that, through your power in the marketplace, your plans would enable you to increase FG sales 30% immediately, but this would come at the cost of cannibalizing your existing food sales by 14%. Turns out that you know that you were about to lose 1% instead anyway due to growth from the gelato firms. This acquisition would also lead to synergies in your non-food sales where you could now sell more other items like cups. This synergy would lead to an increase in those sales by 2%. All of these numbers are annual for the horizon of this analysis, which is five years. COGS is always 40% for all business lines. Also, operating costs not including depreciation are $26 million each year of your five year horizon. These figures would be flat for 5 years and then bottomline cash flows would grow at 3% per year after that in perpetuity. In preparation for this deal, you had purchased some land for $20 million, which is currently worth $25 million. You need this land for the deal, but would sell it if the acquisition is not done. In addition, this venture requires a $150 million investment once the acquisition is consummated. This is to cover additional Net Working Capital reserves, (one-third of this investment), and capital expenditures. All CAPX is straight-line depreciated over the five year horizon of your analysis. At the end of year 10, an additional CAPX of $20 million will need to be spent to allow the firm to grow from there on at the 3% rate per year. You plan to apply an annual overhead allocation of $10 Million to the target, but 60% of this is fixed with the remainder variable. There are no other changes in revenues or costs. These numbers are the figures for each year throughout the life of the project. Note: The corporate tax rate is 20%. Assume that all cash flows are year-end except for the up-front investment. You will finance the project appropriately with 20% AAA debt. Assume beta of debt = 0. Also assume that Anita Gelati is also an excellent comp for the industry. You also have the following financial data pertaining to the market and to your publicly-traded competitors: Treasury Security Rate 3-month T-bill 2% 5-Year T-bond 3% 30-year T-bond 5% AAA debt 7% Market Risk Premium over Treasury Bonds is 6% Your Firm Figo Gelati (FG) Anita Gelati Stock Price $70 $35 $42.50 Total Book Capitalization $600 Million $600 Million $600 Million Leverage Ratio (Book) 20% 20% 25% Shares Outstanding 22 Million 20 Million 20 Million Cash $ 15 Million $ 20 Million $ 0 Million Beta (Yahoo Finance) 1.0 0.9 1.0 Total Sales $250 Million $200 Million $200 Million Food Sales $100 Million $200 Million $190 Million Gelati Sales $0 Million $200 Million $190 Million What is the breakeven bid per share for you to acquire FG?