Fred$$s Sandwich Co$.$ wants to buy Pauline$$s Produce Inc. in order to streamline their supply chain. Industry experts estimate that the synergies of such an acquisition would be $$2$ million. Management of the two companies have come to a tentative agreement that Fred$$s will purchase Pauline$$s by paying $0\mathrm{.}75$ shares for each share of Pauline$$s$.$

Information on the two companies is provided below.

Fred$$s Pauline$$s

Stock Price $$15$ $$10$

# Shares Outstanding $1$ million $800,000$

Value of Projects $$10$ million $$8$ million

Cash $$5$ million $0$

a$.$ What is the value of the combined firm?

b$.$ What is the price per share of the newly merged company?

c$.$ What is the percentage gain to each acquirer shareholder?

d$.$ What is the percentage gain for each target shareholder?