EXTRA CREDIT ASSIGNMENT for up to 8 Points Towards Final Grade (on scale of 1,000 points; guaranteed 4 points for trying; up to 8 depending on if it's right/close/makes sense): What would you estimate to be the Value per Share (per Legg Mason share) of the Legg Mason cost savings mentioned in the release as of the date of the merger announcement? Provide thoughts on who is getting majority of expected synergy value/share (buyer shareholders or Legg shareholders, assuming Legg is properly valued standalone)? Submit an excel file showing me your work, that's it -- keep it simple so I can follow. No separate Write Ups, etc. everything can be done in a tab of a spreadsheet. Due by Sunday, July 23, 9:00AM EST.

Key information:

• Legg Mason closing stock price day before announcement (2/17/20) = $40.72/share
• All Cash Purchase Price announced 2/18/20 = $50.00/share
  • Therefore, Premium = $7.28/share
• Legg Mason shares outstanding were 87,165,000
• First year as combined company would be 2021, second year combined would be 2022
• Dont over-think the date conventions if you wish, you can back-of-the-envelope assume you are valuing at 12/31/19 (even though announcement was a few months later)
• Effective Tax Rate to use 26.0%
• 100% Cash Financed
• Risk Free Rate assume was 3% at the time
• Someone did a calculation of Legg's WACC and it was 9.0%