Optimust Berhad (Optimust) is a manufacturing company. It is currently considering taking overanother company, known as Bumblebeet Berhad (Bumblebeet). The board of directors ofOptimust Berhad intends to make a bid soon and has now approached you to assist them toascertain a value on Bumblebeet. You are given the following information: Optimust BumblebeetNumber of ordinary shares in issue 5 million 1 millionPrice per share RM5 RM3 Both Optimust and Bumblebeet are 100% owned by their shareholders. Optimust estimates thatthe value of the synergistic benefit from acquiring Bumblebeet is RM300,000. Optimust is evaluating two possible options as follows:i. To pay RM2.50 in cash for every share of Bumblebeetii. To offer its 5% of unit shares in issue to Bumblebeet’s shareholders From the above information you are required to:a. Calculate the value of Bumblebeet to Optimust. (2 Marks)b. Determine the Net Present Value (NPV) for each option. (6 Marks)c. Based on the NPV (in part b), choose the best option for Optimust. Interpret your findings toOptimust. (2 Marks)
Optimust Berhad (Optimust) is a manufacturing company. It is currently considering taking over
another company, known as Bumblebeet Berhad (Bumblebeet). The board of directors of
Optimust Berhad intends to make a bid soon and has now approached you to assist them to
ascertain a value on Bumblebeet. You are given the following information:
Optimust Bumblebeet
Number of ordinary shares in issue 5 million 1 million
Price per share RM5 RM3
Both Optimust and Bumblebeet are 100% owned by their shareholders. Optimust estimates that
the value of the synergistic benefit from acquiring Bumblebeet is RM300,000.
Optimust is evaluating two possible options as follows:
i. To pay RM2.50 in cash for every share of Bumblebeet
ii. To offer its 5% of unit shares in issue to Bumblebeet’s shareholders
From the above information you are required to:
a. Calculate the value of Bumblebeet to Optimust. (2 Marks)
b. Determine the
c. Based on the NPV (in part b), choose the best option for Optimust. Interpret your findings to
Optimust. (2 Marks)
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