Energy company PT Medco Energi Internasional is an Indonesia-based family-owned business. It is primarily engaged in oil

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Energy company PT Medco Energi Internasional is an Indonesia-based family-owned business. It is primarily engaged in oil and gas exploration, development, and production. The company, directly or through its subsidiaries, has interests in several oil and gas blocks in Indonesia, the United States, Tunisia, Libya, Oman, Yemen, and Papua New Guinea. Some of the blocks, including Lematang Block, Benagara Block, and Tarakan Block, are operated by its subsidiaries. It is also engaged in gas distribution, coal mining, workover drilling and logging equipment rental, power plants operation, and building leasing through its subsidiaries and associates. Its coal concession area is located in Nunukan, Indonesia. Its subsidiaries include PT Medco E&P Indonesia, Medco Strait Services Pte Ltd, and PT Exspan Petrogas Intranusa.

Energy company PT Medco Energi Internasional made an offer to acquire UK-based Ophir Energy in 2019. President Hilmi Panigoro projected that the Ophir acquisition would boost the company's position in Southeast Asia.

In particular, the deal was expected to boost Medco's 2019 pro forma production by nearly 29% to 110k barrels of oil equivalents per day. The combined company's 1P (prove) and 2P (proven and probable) reserves were expected to improve by 86% to 1,439m barrels of oil equivalent.

The offer was an all-cash consideration for 100% of Ophir's shares and was to be financed by debt. The deal was valued at $517.34m.

The initial offer was made on January 30, 2019. The final offer represented a:

68.7% premium to the Ophir's closing share price on December 28, 2018 (the last business day before the announcement of Medco's possible offer for Ophir); 64% premium to the volume weighted average share price (VWAP) for the one-month period ending on Dec 28, 2018; and a45.3% premium to the volume weighted average share price for the three-month period ending on December 28, 2018.

Medco's market capitalization was around $900m on December 28, 2018. The stock price increased from 685 IDR to 1005 IDR from December 28, 2018 to January 30, 2019 until the deal terms were released. At this point of time, Panigoro's family held 50.5% of Medco's shares through a new holding company.

You are now the director at the firm and remembered the firm from your analyst days. You decide to use market reactions to understand synergies in the deal, recognising their importance from your Advanced Corporate Finance that you took at LBS. In particular, you are interested in understanding:

1) What is the fraction of synergies captured by Ophir's shareholders, assuming that there were no rumours or anticipation of the dealbefore it was announced? [10 points]

2) What is the total US$ value of the synergies, assuming there was no other material information about Medco over the month of January 2019? [5 points]

3) If the consideration was all stock rather than all cash what percent of shares in the combined firm would have been allocated to Ophir's shareholders, assuming the same distribution of synergies that you calculated in part (1)? [10 points]