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What is the Valuation of synergiesin the merger between Shire & Baxalta ?

What is the Valuation of synergiesin the merger between Shire & Baxalta ?

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Answer #1

There are various methods to calculate synergies. Most commonly methods are either calculate savings in annual cost to be termed as synergies or calculation of combined earnings of both companies and reduced by the earnings by each company respectively. similarly market value can also be used instead of earnings. hence [EARNING/MARKET VALUE OF COMBINED FIRM IE SHIRE - EARNING/MARKET VALUE OF SHIRE - EARNING/MARKET VALUE OF BAXALTA]

EPS before merger 637.3

EPS after merger 942.50

increase in EPS 305.20

oustanding shares 601.1 millions

net increase in eps/synergies = $18.34 billions

source: https://www.sec.gov/Archives/edgar/data/936402/000095010316016069/dp68027_ex9903.htm

company announced in its annual report that they expect to earn atleast $20 Billions Revenue in excess of their existing revenue.

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