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University of Illinois at Springfield
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Running head: FIN 320-HOMEWORK ASSIGNMENT 6 1
FIN 320 Homework Assignment 6
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FIN 320 Homework Assignment 6 2
M&A Blended Offer Question 1
Question 1 M&A Blended Offer Sprint is planning on acquiring Nextel. The situation for both
firms before the transaction is as outlined below:
Sprint before the transaction:
1,400 million shares outstanding at a market price of $25 per share
Market value of debt is $5,000 million
No excess cash
Nextel before the transaction:
1,030 million shares outstanding at a market price of $30 per share
Market value of debt is $5,000 million
No excess cash
Transaction details:
Sprint will pay $2 per share of Nextel and will also exchange each share of Nextel for 1.1661
shares of Sprint
Sprint will finance the cash component of the offer by taking on an acquisition loan
Sprint will assume the outstanding debt of Nextel
Synergies from the acquisition will be $12,000 million (including any tax shields from the
acquisition loan)

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Running head: FIN 320-HOMEWORK ASSIGNMENT 6 FIN 320 – Homework Assignment 6 Name Institution Date 1 FIN 320 – Homework Assignment 6 M&A Blended Offer Question 1 Question 1 – M&A Blended Offer Sprint is planning on acquiring Nextel. The situation for both firms before the transaction is as outlined below: Sprint before the transaction: • 1,400 million shares outstanding at a market price of $25 per share • Market value of debt is $5,000 million • No excess cash Nextel before the transaction: • 1,030 million shares outstanding at a market price of $30 per share • Market value of debt is $5,000 million • No excess cash Transaction details: • Sprint will pay $2 per share of Nextel and will also exchange each share of Nextel for 1.1661 shares of Sprint • Sprint will finance the cash component of the offer by taking on an acquisition loan • Sprint will assume the outstanding debt of Nextel • Synergies from the acquisition will be $12,000 million (including any tax shields from the acquisition loan) 2 FIN 320 – Homework Assignment 6 A) What is the enterprise value of Sprint after its acquisition of Nextel (𝑉𝑆𝑝𝑟𝑖𝑛𝑡+𝑁𝑒𝑥𝑡? ...
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