Two companies operating in the industry where one company A Lld decides to acquire B Ltd@ Rs 25 per share and the following information isa available PARTICULARS ALTD BLTD Present Earmings (Rs) 200,00,000 100,00,000 Shares Outstanding 100,00,000 50,00,000 EPS (Rs) 2.00 2.00 Price per share (Rs) 40 38 PE Ratio 20 .00 19 00 Post-acquisition the new combined entity will have Total combined eamings (Rs) 3,00,00,000 OR 3 crores Total Shares outstanding 1,31,25000 EPS for Combined entity (Rs) 2 28 Based on the above details, comment on the effects of merger for shareholders of A Ltd and B Ltd. Would you advise both shareholders to approve the merger.

Two companies operating in the industry where one company A Lld decides to acquire B Ltd@ Rs 25 per share and the following information isa available PARTICULARS ALTD BLTD Present Earmings (Rs) 200,00,000 100,00,000 Shares Outstanding 100,00,000 50,00,000 EPS (Rs) 2.00 2.00 Price per share (Rs) 40 38 PE Ratio 20 .00 19 00 Post-acquisition the new combined entity will have Total combined eamings (Rs) 3,00,00,000 OR 3 crores Total Shares outstanding 1,31,25000 EPS for Combined entity (Rs) 2 28 Based on the above details, comment on the effects of merger for shareholders of A Ltd and B Ltd. Would you advise both shareholders to approve the merger.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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