Camel Industries is considering the acquisition of Sugar Limited and has appointed you as an acquisition and merger specialist to evaluate the project. Your task is to assess whether the company should move forward with the takeover. The following market data has been provided for your analysis:- Earnings per share: R3.60 for Camel Industries, R2.80 for Sugar Limited- Market price per share: R8.00 for Camel Industries, R5.00 for Sugar Limited- Number of shares: 3 million for Camel Industries, 2 million for Sugar Limited As per the takeover agreement, Camel Industries will make a cash payment of R15 million to Sugar Limited. The expected synergistic benefits from the acquisition are estimated at R8 million. Your role is to provide guidance on whether the acquisition is a beneficial move for Camel Industries.

Camel Industries is considering the acquisition of Sugar Limited and has appointed you as an acquisition and merger specialist to evaluate the project. Your task is to assess whether the company should move forward with the takeover. The following market data has been provided for your analysis:- Earnings per share: R3.60 for Camel Industries, R2.80 for Sugar Limited- Market price per share: R8.00 for Camel Industries, R5.00 for Sugar Limited- Number of shares: 3 million for Camel Industries, 2 million for Sugar Limited As per the takeover agreement, Camel Industries will make a cash payment of R15 million to Sugar Limited. The expected synergistic benefits from the acquisition are estimated at R8 million. Your role is to provide guidance on whether the acquisition is a beneficial move for Camel Industries.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter23: Corporate Restructuring

Section: Chapter Questions

Problem 7P

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Camel Industries is considering the acquisition of Sugar Limited and has appointed you as an acquisition and merger specialist to evaluate the project. Your task is to assess whether the company should move forward with the takeover.The following market data has been provided for your analysis:Earnings per share: R3.60 for Camel Industries, R2.80 for Sugar LimitedMarket price per share: R8.00 for Camel Industries, R5.00 for Sugar LimitedNumber of shares: 3 million for Camel Industries, 2 million for Sugar LimitedAs per the takeover agreement, Camel Industries will make a cash payment of R15 million to Sugar Limited. The expected synergistic benefits from the acquisition are estimated at R8 million. Your role is to provide guidance on whether the acquisition is a beneficial move for Camel Industries.Required:4.1 Calculate the value of the combined companies4.2 Calculate the net present value of the proposal4.3 Calculate the take-over premium Assume that the take-over is based on an…
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Mike Limited, a software development company is contemplating the acquisition of Ross Limited 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 R24 million. It was agreed that the purchase consideration for the acquisition should be based on an exchange of 1.4 shares of Ross Limited for each share of Mike Limited.The key acquisition data provided for this acquisition is as follows:Mike Limited possesses 18.8 million shares with a market price of R32 per share and earnings after tax of R26 million, whereas Ross Limited has 13.2 million shares with a market price of R28 per share and earnings after tax of R19 million. Required:1 Calculate the combined value of the proposed acquisition. 2 Calculate the total number of shares in the proposed acquisition. 3 Determine the proposed post-acquisition market price per share. 4 Determine the purchase price of Ross Limited that is implied…
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