Time Inc.'s entry into the entertainment industry

Conclusion [about question 1]:

The exchange rate is very attractive for Warner’s shareholders, because they will get $515 million more than their original value of investment. For the same reason the exchange ratio is unattractive for Time’s old shareholders, because they have to suffer the loss of this $515 million. Moreover, the overall NPV of the merger is negative. As following table shows, after
the merger Warner’s shareholders will be relatively better off than Time’s shareholders. This might be a reason why Warner’s managers have been ready to merge with Time and gave up their managerial jobs.