Calculate the post-acquisition increase/decrease price of the share if Tim Limited acquires Polo Limited for R45 million. Assume that Tim Limited has 7 million shares with a market price of R7.00 per share and Polo Limited has 5 million shares with a market price of R5.00 per share. The synergy of this merger is R11 million.
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Calculate the post-acquisition increase/decrease price of the share if Tim Limited acquires Polo Limited for
R45 million. Assume that Tim Limited has 7 million shares with a market price of R7.00 per share and Polo Limited
has 5 million shares with a market price of R5.00 per share. The synergy of this merger is R11 million.
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- Consider the following data in relation to a proposed acquisition, where Firm B will take over Firm A in a horizontal takeover. Pre-merger Value A $550m Pre-merger Value B $420m Post-merger Value A + B $1,150m Cash Offer $580m Share Offer 52% of Shares in A + B Estimate the gains available from the merger. Estimate the value of the merger to firm A’s shareholders under both the cash and share offer. Estimate the value of the merger to firm B’s shareholders under both the cash and share offer. Which offer will predominate, cash or shares, if the shareholders of A are given the choice?Consider the following data in relation to a proposed acquisition, where Firm B will take over Firm A in a horizontal takeover. Pre-merger Value A $600m Pre-merger Value B $475m Post-merger Value A + B $1,200m Cash Offer $630m Share Offer 53% of Shares in A + B a. Estimate the gains available from the merger. b. Estimate the value of the merger to firm A’s shareholders under both the cash and share offer. c. Estimate the value of the merger to firm B’s shareholders under both the cash and share offer. d. Which offer will predominate, cash or shares, if the shareholders of A are given the choice?Prior to a potential merger Ross Co has 4500 shares outstanding at a market price per share of $31. Bulbs Inc has 2,800 shares outstanding at $18 per share. Assume Ross Co has estimated the valueof the synergistic benefits from acquiring Bulb Inc to be $3,500. Nowther firm has outstanding debt. The acquiring firm offered a price of $19.75 per share to the target. If the deal goes through, what is the merger premium? A) 4900 B) 3500 C) 2800 D) 6125 E) 0
- Mammoth Inc. is acquiring Snail Ltd. Mammoth's share price is $50 and Snail's share price is $10. Both firms have 1 million shares outstanding. Mammoth expects a discounted synergistic value of $5 million from the merging of operations of the two firms. If Mammoth pays cash of $11.5 million to Snail's shareholders, what is the value of the merged firm? $68.5 million $65.0 million $60.0 million $63.5 millionThe financial manager of Company X is evaluating Company Y as a possible acquisition. Company Y is expected to produce annual earnings before interest and taxes P485,000. Depreciation write-off's on Company Y's assets are P120,000 annually. Both companies have a 34% marginal tax rate. If the merger takes place, Company X will assume P1,425,000 of Company Y's long-term liabilities. Company X's weighted average cost of capital is 9.25% and Company Y's weighted average cost of capital is 14.75%. The acquisition will be evaluated as a perpetuity. If Company X acquires Company Y for PI,125,000 in cash, then the estimated change in the combined wealth of Company X's shareholders will be nearest P433,729 increase. b. 10. a. P1,558,729 increase. P379,830 decrease. d. C. P2,207,838 increase.Before the acquisition of AFB, the market value of MBSB and AFB were RM250 million and RM15 million respectively. The offer from MBSB to AFB was at cost of RM17.2 million which above the market value and number of share outstanding for MBSB and AFB were 25 million and 34 million respectively. Based on the information given, calculate: 3. (a) Number of shares to be exchange for the acquisition. (b) Share price of merged firm (c) The synergy value created by this merger.
- Watford Refiners is contemplating the acquisition of Surrey Ltd by means of a share issue. The combination of the two firms' operations will result in economies of scale and the additional value generated is estimated to be R20 million. The financial directors of the two companies have agreed to an equal split of this value between each firm's shareholders. It was also agreed that the purchase consideration for the Surrey Ltd acquisition should be based on an exchange of 1.25 shares of Watford Refiners for each share of Surrey Ltd.Key acquisition data is detailed below:Company No. of shares Price per share Earnings after TaxWatford Refiners 8 million R12 R10 millionSurrey Ltd 5 million R9 R7 million Required:4.1 Calculate the combined value of the proposed acquisition. 4.2 Calculate the total number…Kunla Ltd and Cunta Ltd intend to merge. The following were observed just before the merger announcement. Kunla Ltd Cunta Ltd Market price per share GH¢ 400 GH¢200 Number of shares 2,000,000 1,000,000 Market value of firm GH¢ 800,000,000 GH¢ 200,000,000 The proposed merger will create GH¢50,000,000 in synergies. Kunla Ltd intends to pay GH¢ 130,000,000 cash for Cunta Ltd. What is the cost of the merger to Kunla Ltd? Compute the NPV of the merger. The managers of these firms have proposed to merge to diversify their activities and to reduce risk. Should you pay a premium for the merged firm? What convincing reasons can these managers give for the proposed merger? What roles do investment banks play in facilitating M&A deals?Watford Refiners is contemplating the acquisition of Surrey Ltd by means of a share issue. The combination of the two firms' operations will result in economies of scale and the additional value generated is estimated to be R20 million. The financial directors of the two companies have agreed to an equal split of this value between each firm's shareholders. It was also agreed that the purchase consideration for the Surrey Ltd acquisition should be based on an exchange of 1.25 shares of Watford Refiners for each share of Surrey Ltd.Key acquisition data is detailed below:Company No. of shares Price per share Earnings after TaxWatford Refiners 8 million R12 R10 millionSurrey Ltd 5 million R9 R7 million 1.1 How much will the shareholders of Surrey Ltd gain or lose on a per share basis.1.2 Determine the…
- Consider the following information about Firm A and Firm T: Item Firm A (Acquiring firm) Firm T (Target firm) Price per share $20 $15 Outstanding shares 50 25 Total market value $1000.00 $375 Total cost of the acquisition is $500.00 and the merger is estimated to create a synergistic gain of $700.00. What is the NPV of the acquisition to firm A? Select one: a. $1075.00 b. $575.00 c. $425.00 d. $555.00Firm A has a total market value of RM 200 million. It is planning to acquire Firm B, which has a total market value of RM 630 million. Firm A estimates that the merged firm will be worth RM 3050 million as a result of operating efficiencies. The financial accountants are advising that Firm A will have to pay a premium of RM 24 million in price to acquire Firm B. merger related costs and expenses are estimated at RM 42 million. Is there an advantage arising from merger, in particular to Firm A?Bartlies Co is considering whether to acquire Indigo Inc. The values of the two companies as separate entities are $28 million and $14 million, respectively, Bartlies Co estimates that by combining the two companies, it will reduce costs by $540.000 per year in perpetuity. Bartlies considers offering Indigo Inc's shareholders a 50% holding in Bartlies Co. The opportunity cost of capital is 10%. a. What is the value of the stock in the merged company held by the original Indigo Inc's shareholders? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Value of the stock million 00-42:24 b. What is the cost of the stock alternative? (Do not round intermediate calculations).