Group _______

THE SYNERTECH-DOSAGEN NEGOTIATION

Confidential Role for

Dosagen

You are the CFO of Dosagen, a medium-sized pharmaceutical company with annual sales of
$150 million, and significant cash reserves. You need to sell off a plant that has been producing
a line of genetically-engineered compounds, which no longer fit in with your business strategy.
The plant is uniquely configured because of the peculiarities of manufacturing genetically
engineered compounds. It could also be used for making computer chips with little
modification, but the chip industry currently has excess capacity.

Three years ago, you were the one who was in charge of negotiating the purchase of this plant
for $14 million during bankruptcy proceedings of Biotech, a diversified chemical company. A
year after you purchased this plant, it was appraised at $27 million. Since that time, the real
estate market has declined 20% due to the state of the economy. Nine months ago, a similar plant
in a neighboring town to your plant sold for $13 million. Given that this information is on public
record, potential buyers will have access to this information.

If you rebuilt the plant in a normal configuration for future sale, it would have an appraised
value of $10 million. (Rebuilding the plant would take six months and cost $3 million, thus
the net yield of this strategy is $7 million). You would rather sell the plant as it currently
exists as a “turn-key” operation and keep the work force intact. You would like to sell the
plant immediately as is, transferring the work force over to whomever purchases the plant, but
could also keep it operating at break-even for up to a year if you had to delay the sale.

Synertech, a $700 million pharmaceutical company, has expressed some interest in the plant.
They have inspected the plant and deemed it suitable for their purposes. Their only expressed
reservation had been that the location is 70 miles away from their headquarters facilities.

You are about to meet with the CFO of Synertech. You have full authority to sell the plant
for whatever you can get. The transaction price must be in cash only and the deal will close
within 60 days. No other terms can be added.

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Name: Sandra Saint-Hilaire Group: 2

THE SYNERTECH-DOSAGEN NEGOTIATION

Dosagen Representative

Prenegotiation Questions

The following questions are designed to help you plan for your first negotiation exercise.
Please write your name and group number in the spaces provided above and then complete
all questions below.

(1) If you were to make the first offer, what amount would you ask for the Dosagen plant?

$30 Million

(2) What is the lowest amount you are willing to accept for the Dosagen plant?

$14 Million

(3) What is your target price (or your goal) for selling the Dosagen plant?

$27 Million (1st year earning)

(4) What do you think is the market value of the Dosagen plant?

$20.5 Million

(5) If there is an agreement, what is your best prediction of the final negotiated price
for the Dosagen plant?

$20 Million

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(6) If the Synertech Representative were to make the first offer, what amount do you think
s/he would offer you for the Dosagen plant?

$13 Million

(7) What do you think is the highest amount the Synertech Representative will pay
for the Dosagen plant?

$20 Million

(8) What do you think is the Synertech Representative’s target price (or goal) for
acquiring the Dosagen plant?
$15 Million

(9) If there is an agreement, what do you think the Synertech Representative’s best
prediction is of the final negotiated price for the Dosagen plant?

$20 Million