managerial-finance-m-amp-a-and-ipos

Documents and notes attached for reference. I only need question number one answered.

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 cashNextel 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 cashTransaction details:

•  Sprint will pay $2 per share of Nextel and will also exchange each share of Nextel for 1.1661 sharesof 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 theacquisition loan)

1. A) What is the enterprise value of Sprint after its acquisition of Nextel ( + )?
2. B) What is the market value of equity of Sprint after its acquisition of Nextel ( + )?
3. C) What is the share price of Sprint after its acquisition of Nextel ( + )?
4. D) What is the Price Paid by Sprint for the acquisition of Nextel?
5. E) How much value did Sprint create for its shareholders through the acquisition?