What is the most that om should pay for happy

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Question - As an alternative to going public, Happy is entertaining a cash acquisition by Om Corp. ("Om"), a maker of yoga mats, essential oils and other stress reducing products. The stand-alone value of Happy is approximately $280 million, based on the discounted cash flow analysis. The stand-alone value of Om is approximately $1,500 million. Om believes that combining the companies could generate the following after-tax benefits/costs: additional revenue of $8 million, $6 million of cost saving and $1.5 million of severance payments.

- What is the most that OM should pay for Happy?

- What is the least Happy should accept?

- What is the value of the combined firm?

- Please list 1 pro and 1 con Happy should consider before entering into this transaction.

Reference no: EM132955511

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