Question

Holmes, Inc., has offered $482 million cash for all of the common stock in Watson Corporation. Based on recent market information, Watson is worth $454 million as an independent operation. If the merger makes economic sense for Holmes, what is the minimum estimated value of the synergistic benefits from the merger? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Answer 1

$28 million

Step-by-step explanation:

Calculation to determine the minimum estimated value of the synergistic benefits from the merger

Using this formula

Minimum estimated value of synergistic benefits=Cash-Value

Let plug in the formula

Minimum estimated value of synergistic benefits =$482 million-$454 million

Minimum estimated value of synergistic benefits=$28 million

Therefore the minimum estimated value of the synergistic benefits from the merger is $28 million