Croatia Inc. is in the process of acquiring Vistara Inc. on a share exchange basis. The information related to the two companies is provided below. Croatia Inc. $14,000,000 1,500,000 Vistara Inc. $6,000,000 1,600,000 $5 10 Profit after tax Shares outstanding Earnings per Share PE Ratio As an analyst of Croatia Inc., you are required to calculate the following: Pre-Merger Market Value per Share of both companies. The maximum share exchange ratio Croatia Inc. can offer without the dilution of: EPS and $8 15 Market Value per Share Note: Do not round off any intermediate calculations. Only the rations shall be rounded off up to four decimals. (1) Pre-Merger MV: Croatia Inc.= $50. Vistara Inc. = $120.(1) (1) 0.6250 (2) 0.4167 (1) Pre-Merger MV: Croatia Inc.= $120. Vistara Inc = $50 (1) (1) 0.6200 (2) 0.4221 (1) Pre-Merger MV: Croatle Inc. $120, Vistara Inc. = $50 (1) (1) 0.6250 (2) 04167 (1) Pre-Merger MV: Croatia Inc.= $110, Vistara Inc. = $120.() (1) 0.6200 (2) 04221

Croatia Inc. is in the process of acquiring Vistara Inc. on a share exchange basis. The information related to the two companies is provided below. Croatia Inc. $14,000,000 1,500,000 Vistara Inc. $6,000,000 1,600,000 $5 10 Profit after tax Shares outstanding Earnings per Share PE Ratio As an analyst of Croatia Inc., you are required to calculate the following: Pre-Merger Market Value per Share of both companies. The maximum share exchange ratio Croatia Inc. can offer without the dilution of: EPS and $8 15 Market Value per Share Note: Do not round off any intermediate calculations. Only the rations shall be rounded off up to four decimals. (1) Pre-Merger MV: Croatia Inc.= $50. Vistara Inc. = $120.(1) (1) 0.6250 (2) 0.4167 (1) Pre-Merger MV: Croatia Inc.= $120. Vistara Inc = $50 (1) (1) 0.6200 (2) 0.4221 (1) Pre-Merger MV: Croatle Inc. $120, Vistara Inc. = $50 (1) (1) 0.6250 (2) 04167 (1) Pre-Merger MV: Croatia Inc.= $110, Vistara Inc. = $120.() (1) 0.6200 (2) 04221

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The directors of Nico Limited have appointed you as a merger and acquisition specialist. They are considering theacquisition of Maya Limited. You are to advise them whether or not to proceed with the project.The following information is available: Nico Limited Maya LimitedMarket price per share R400.00 R280.00Earnings per share R240.00 R120.00No. of shares issued 2 000 000 800 000 - Cash payment to Maya Limited = R78 million.- Synergy benefits of R30 million will accrue through the acquisition.- Maya Limited have just had their assets re-valued and the valuation has appreciated quite significantly. Calculate the post-acquisition increase/decrease price of the share Assume the acquisition is based on market values with a cash payment Calculate the post-acquisition earnings per share Assume the acquisition is based on earnings per share
A limited is considering making a tender offer for B Ltd. The merger would result in economies of scale (Benefit of synergy) of Rs.20 lakh. The relevant financial information for B Ltd. is as follows: Number of shares outstanding 1,80,000 Earnings per share Rs.12 Market price per share Rs.76 A Limited intends to make a two-tier tender offer wherein it will offer Rs.82 for the first 1, 00,000 shares and Rs.75 for the remaining shares. a. If the tender is successful, how much should A Ltd pay to B Ltd.? b. If the Economies of merger is Rs.20, 00,000, How much of this goes to the Shareholders of A Ltd & B Ltd respectively? How much are the shareholders of A Ltd. And B Ltd. benefitting from the economies of merger?
Y2
prior to a potential merger veggie co has $6,150 in total earnings with $1,800 shares outstanding at a market price per share of $41. Fruits ince has $3300 in total earnings with 1235 shares outstanding at $26 per share. assume veggie co acquires fruits inc via an exchange of stock at a price of $28 for each share of fruits inc stock. both veggie co and fruits inc have no debt outstanding. what will veggie co earning per share be after the merger? A. 3.58 B. 3.32 C. 2.67 D. 3.04 E. 3.95
Consider the following information about Firm A and Firm T: Item Firm A (Aquiring Firm Firm T (Target Firm Price/share $20 $15 Outstanidng shares 50 25 Total market value $1,000.00 $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 merger premium? Select one: a. $135.00 b. $125.00 c. $175.00 d. $150.00
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4. The following table shows pre-merger data for ABC Company and XYZ, Inc. ABC XYZ No of share outstanding 2,000,000 5,000,000 EPS $2.50 $4.00 Price per share $15.00 $60 a) Assume XYZ is taking over ABC by issuing one of its shares for four shares of ABC. If there is no synergy, what would be the post-merger share price of XYZ? What would be the NPV of the merger? b) Assume there is synergy value of $4,200,000 created from the merger. What would be the post-merger price per share of XYZ? What would be the NPV of the merger? 5. Lazos Company is in distress mainly due to its failure to adopt the current technology. Creditors took Lazos to bankruptcy court and Lazos is fighting for a reorganization. The following is its condensed balance sheet. Book Value Market Value Current assets $ 120,000.00 $ 100,000.00 Machinery 200,000.00 150,000.00 Other fixed…
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. $555.00
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 million
Bhupatbhai
Apex Corporation is considering the purchase of Pinnacle Company in a stock-for-stock exchange. Selected data on the two companies are shown in the following table: Apex Pinnacle $845 $120 40 36 Sales (millions) Earnings after taxes (millions) Common shares outstanding (millions) Share price Earnings per share Dividends per share. P/E ratio Dividend payout ratio Assume that there are no synergistic benefits as the result of the merger. Determine EPS for the combined company if Apex offers a (Round your answers to three decimal places): a. 10 percent premium for Pinnacle $ b. 20 percent premium for Pinnacle $ c. 30 percent premium for Pinnacle $2,190 $ 280 70 72 $ $ $ 4.00 2.00 18 50% $ $ 3.00 1.20 12 40%
Xterm R US has offered $178,500 cash for all of the common stock of Outdoor Co. Based on recent market information Outdoor Co is worth $174,200 as an independent operation. If the merger makes economic sense for Xterm R US, what is the minimum estimated value of the synergistic benefits from the merger? A)4300 B) 4730 C) 5160 D) 4000 E) 4945

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