Mergers and Acquisitions
Homework Assignment 1 (revised 9/14/2013)

The attached (end of this file) press release dated 12/16/04 from Symantec (SYMC) describes conditions under which it would acquire Veritas Software (VRTS). Note that will find arbitrage examples and other useful information in the file: “Arb Handouts w-o formulas.xlx” on Blackboard.

This assignment has two parts, A and B.
A. Arbitrage Analytical Analysis (spreadsheet required)
This first part requires that you analyze this transaction from an arbitrageur's viewpoint.

Assumptions Related to Part A: make the following assumptions in your analysis:
Assume that you borrow 40% of any funds you need (i.e. you buy on 40% margin)
You pay interest on borrowed
At the same time, they must maintain tight security, comply with all regulatory requirements and operate within their existing budget constraints," said Gary L. Bloom, Chairman, President and CEO of VERITAS Software. "Through our unique portfolio of solutions, Symantec and VERITAS are best positioned to address the ever-growing needs of our customers. Based on IDC data, the total market opportunity for the combined company today is approximately $35 billion and is expected to grow to $56 billion by 2007."

By merging with VERITAS, Symantec will expand its combined revenue base and create an entity with significantly greater financial scale and resources. The aggregate revenue of the combined company is expected to be approximately $5 billion for fiscal year 2006, which begins in April 2005 and ends in March 2006. Approximately 75 percent of the revenue of the combined company is expected to come from the enterprise business and 25 percent from the consumer business. In addition, the combined company will have approximately $5 billion in cash.

The combination will create significant benefits for customers of both companies, including:
Breadth - A broad range of leading security and storage solutions at every tier of the enterprise - end point, gateway, and application - across all platforms from a single vendor;
Depth - Leading-edge