The directors of Ostrow Ltd have appointed you as a merger and acquisition specialist. They are considering the acquisition of Osborn Ltd. You are to advise them whether to proceed with the project. The following data is available: Ostrow LTD Osborn LTD Market price per share R10,00 R8,00 Earnings per share R3,00 R2,40 No.shares issued 2 million 0,5 million Additional information: Cash payment to Ostrow Ltd = R12 million. Synergy benefits of R10 million will accrue through the acquisition. Ostrow Ltd has just had its assets re-valued and the valuation has appreciated quite significantly. a) Calculate the acquisition premium. b) Calculate the post-acquisition market price of the share c) Calculate the post-acquisition increase/decrease price of the share
The directors of Ostrow Ltd have appointed you as a merger and acquisition specialist. They are considering the acquisition of Osborn Ltd. You are to advise them whether to proceed with the project. The following data is available: Ostrow LTD Osborn LTD Market price per share R10,00 R8,00 Earnings per share R3,00 R2,40 No.shares issued 2 million 0,5 million Additional information: Cash payment to Ostrow Ltd = R12 million. Synergy benefits of R10 million will accrue through the acquisition. Ostrow Ltd has just had its assets re-valued and the valuation has appreciated quite significantly. a) Calculate the acquisition premium. b) Calculate the post-acquisition market price of the share c) Calculate the post-acquisition increase/decrease price of the share
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 Ostrow Ltd have appointed you as a merger and acquisition specialist. They are considering the
acquisition of Osborn Ltd. You are to advise them whether to proceed with the project.
The following data is available:
| Ostrow LTD | Osborn LTD | |
| Market price per share | R10,00 | R8,00 |
| Earnings per share | R3,00 | R2,40 |
| No.shares issued | 2 million | 0,5 million |
Additional information:
Cash payment to Ostrow Ltd = R12 million.
Synergy benefits of R10 million will accrue through the acquisition.
Ostrow Ltd has just had its assets re-valued and the valuation has appreciated quite significantly.
a) Calculate the acquisition premium.
b) Calculate the post-acquisition market price of the share
c) Calculate the post-acquisition increase/decrease price of the share
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