Question

Pearl, Inc., has offered $357 million cash for all of the common stock in Jam Corporation. Based on recent market information, Jam is worth $319 million as an independent operation. If the merger makes economic sense for Pearl, what is the minimum estimated value of the synergistic benefits from the merger?

Answer 1

Minimum estimated value of the synergistic benefits from the merger

Minimum estimated value of the synergistic benefits from the merger ill be the difference between the amount paid or offered for the common stocks and the market value or the worth of the operation

Minimum estimated value of the synergistic benefits from the merger

= Purchase price paid or offered – Market Value

= $357,000,000 – 319,000,000

= $38,000,000

“Hence, The Minimum estimated value of the synergistic benefits from the merger = $38,000,000”