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4. (20 points) I Can, Corp (Can) has approached Exhale about a possible business combination in which can would purchase Exhale. Assume the pre-merger (fair value) Exhale is approximately $16 million, excluding debt and there are 800,000 shares outstanding. Assume the fair market equity value (pre-merger) of Can is $25.0 million and it has 250,000 shares outstanding. Assume Exhale has $2.94 million of net debt and $750,000 excess cash. Can has no net debt or excess cash. Can believes that combining the companies could generate the following after-tax benefits/costs: $1,000,000 of additional revenue and expense savings $150,000 of severance payments 4a. What is the pro forma value of the combined firm (including Exhale's debt)? $44,040,000 4b. What is the most (per share) that can should pay to Exhale's Shareholders? $21.06 4c. What is the least (per share) that Exhale's Shareholders should accept? $20.00 4d. Please list 1 pro and 1 con Exhale's Management Team should consider before entering into this transaction. QUALITATIVE 4. (20 points) I Can, Corp (Can) has approached Exhale about a possible business combination in which can would purchase Exhale. Assume the pre-merger (fair value) Exhale is approximately $16 million, excluding debt and there are 800,000 shares outstanding. Assume the fair market equity value (pre-merger) of Can is $25.0 million and it has 250,000 shares outstanding. Assume Exhale has $2.94 million of net debt and $750,000 excess cash. Can has no net debt or excess cash. Can believes that combining the companies could generate the following after-tax benefits/costs: $1,000,000 of additional revenue and expense savings $150,000 of severance payments 4a. What is the pro forma value of the combined firm (including Exhale's debt)? $44,040,000 4b. What is the most (per share) that can should pay to Exhale's Shareholders? $21.06 4c. What is the least (per share) that Exhale's Shareholders should accept? $20.00 4d. Please list 1 pro and 1 con Exhale's Management Team should consider before entering into this transaction. QUALITATIVE

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