Value of Firms pre-merger was in the ra o 300:240 i.e.

5:4
Value of Firms post-merger is in the ra o 321:299 i.e. 5:4.67
Thus, Nextel shareholders have got a be er share of the value of the combined firm as well as the synergy gains
For a balanced split of value, the exchange ra on should have been 1.2:1 instead of 1.4:1 (i.e. in the ra o of market price of shares of both t

Break-even synergy level

Revised Shares
New Value of Value per
Sprint Nextel Synergy no. of Held by 30
Value Sprint Sh share
Shares Sprint SH
28
300 240 0 540 23.2 12 279 23.28
300 240 10 550 23.2 12 284 23.71
26
300 240 20 560 23.2 12 290 24.14

Share Price
300 240 30 570 23.2 12 295 24.57
24
300 240 40 580 23.2 12 300 25.00
300 240 50 590 23.2 12 305 25.43 22
300 240 60 600 23.2 12 310 25.86
300 240 70 610 23.2 12 316 26.29 20
0 10
300 240 80 620 23.2 12 321 26.72
300 240 90 630 23.2 12 326 27.16
300 240 100 640 23.2 12 331 27.59
300 240 110 650 23.2 12 336 28.02
300 240 120 660 23.2 12 341 28.45