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 exchange of 1.4 shares of Camel Industries for each share of Sugar Limited, determine:4.4 The number of shares to be issued to Sugar Limited4.5 The expected market price per share 4.6 The expected gain or loss to both shareholders 4.7 The purchase price that is implied by this 1.4 exchange 4.8 The new net present value4.9 The new premium 4.10 Which offer is better suited to Camel Industries? Why?
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.
Required:
4.1 Calculate the value of the combined companies
4.2 Calculate the
4.3 Calculate the take-over premium
Assume that the take-over is based on an exchange of 1.4 shares of Camel Industries for each share of Sugar Limited, determine:
4.4 The number of shares to be issued to Sugar Limited
4.5 The expected market price per share
4.6 The expected gain or loss to both shareholders
4.7 The purchase price that is implied by this 1.4 exchange
4.8 The new net present value
4.9 The new premium
4.10 Which offer is better suited to Camel Industries? Why?
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