A financial analyst has identified several firms which she believes may soon be involved in merger...
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A financial analyst has identified several firms which she believes may soon be involved in merger and acquisition activity. The firms are: Nile Ltd: An online ecommerce website selling a variety of small goods to individual consumers. ExpressWay Ltd: A nationwide courier company. BD Ltd: A large beer brewing company producing several varieties of beer in three large breweries. Jaguar Ltd: A beer brewing company operating two breweries and specialising in light beer. Assume that there are no transaction costs such as fees paid to investment bankers. Use this information to help answer the questions that follow. (a) If Nile Ltd acquires ExpressWay Ltd, this would be best described as a Select alternative acquires Jaguar Ltd, this would be best described as a Select alternative (b) Some information about Nile Ltd and ExpressWay Ltd (pre-acquisition) is shown below. If BD Ltd Nile Ltd ExpressWay Ltd Share price $6.00 $3.00 Number of shares outstanding 40,000,000 30,000,000 Total earnings $12,000,000 $8,000,000 Market cap $240,000,000 $90,000,000 $0.30 20.00 $0.27 11.25 EPS PE Nile wants to acquire ExpressWay using a stock swap. It wants to give ExpressWay shareholders 1 new Nile share for every 2 existing ExpressWay shares. There is no synergy in the transaction. The total market capitalisation of the combined company would be $ m. Note: Please provide your answer with two decimal points in $ million in the format of xx.xx (for example, if the answer is $12.34 million, type in 12.34). The earnings per share (EPS) of the combined company would be $ Note: Please provide your answer in dollars with two decimal points in the format of xx.xx (for example, if the answer is $12.34, type in 12.34). The original shareholders of Nile Ltd would be Select alternative because Select alternative following the acquisition (c) The information about Nile and ExpressWay (pre-acquisition) shown in the table above under part (b) is still correct. However, Nile believes that if it acquires Expressway, this will create synergies worth $30m. In this case, the maximum number of shares in its own stock that Nile should offer ExpressWay shareholders without generating a negative NPV is Nile share(s) for every 3 ExpressWay shares. Note: Please provide your answer as an integer (for example, if the answer is 1.00, type in 1). A financial analyst has identified several firms which she believes may soon be involved in merger and acquisition activity. The firms are: Nile Ltd: An online ecommerce website selling a variety of small goods to individual consumers. ExpressWay Ltd: A nationwide courier company. BD Ltd: A large beer brewing company producing several varieties of beer in three large breweries. Jaguar Ltd: A beer brewing company operating two breweries and specialising in light beer. Assume that there are no transaction costs such as fees paid to investment bankers. Use this information to help answer the questions that follow. (a) If Nile Ltd acquires ExpressWay Ltd, this would be best described as a Select alternative acquires Jaguar Ltd, this would be best described as a Select alternative (b) Some information about Nile Ltd and ExpressWay Ltd (pre-acquisition) is shown below. If BD Ltd Nile Ltd ExpressWay Ltd Share price $6.00 $3.00 Number of shares outstanding 40,000,000 30,000,000 Total earnings $12,000,000 $8,000,000 Market cap $240,000,000 $90,000,000 $0.30 20.00 $0.27 11.25 EPS PE Nile wants to acquire ExpressWay using a stock swap. It wants to give ExpressWay shareholders 1 new Nile share for every 2 existing ExpressWay shares. There is no synergy in the transaction. The total market capitalisation of the combined company would be $ m. Note: Please provide your answer with two decimal points in $ million in the format of xx.xx (for example, if the answer is $12.34 million, type in 12.34). The earnings per share (EPS) of the combined company would be $ Note: Please provide your answer in dollars with two decimal points in the format of xx.xx (for example, if the answer is $12.34, type in 12.34). The original shareholders of Nile Ltd would be Select alternative because Select alternative following the acquisition (c) The information about Nile and ExpressWay (pre-acquisition) shown in the table above under part (b) is still correct. However, Nile believes that if it acquires Expressway, this will create synergies worth $30m. In this case, the maximum number of shares in its own stock that Nile should offer ExpressWay shareholders without generating a negative NPV is Nile share(s) for every 3 ExpressWay shares. Note: Please provide your answer as an integer (for example, if the answer is 1.00, type in 1).
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Related Book For
International Financial Reporting and Analysis
ISBN: 978-1408075012
5th edition
Authors: David Alexander, Anne Britton, Ann Jorissen
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