Company X and Company Y are considering a merger. As part of the merger, Company Y...

 

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Company X and Company Y are considering a merger. As part of the merger, Company Y is exchange one-for-one basis its shares of company X. The exchange ratio is based on the market prices of Company X and Company Y. The market data of the two companies are provided below: Market Data Net income (R) Shares outstanding Earnings per share (R) P/E Ratio Market price (R) 4.1. 4.2. 4.3. Company X 45 000 8 000 5.5 9 46 Company Y 65 000 2 000 3.5 15 46 Differentiate between business takeover and merging, also provide South African examples with justification for your answers. (6) Justify the wealth maximization rationale for using merger and acquisition as drivers? (4) Based on the above data, should Company X and Company Y merge? (10) Company X and Company Y are considering a merger. As part of the merger, Company Y is exchange one-for-one basis its shares of company X. The exchange ratio is based on the market prices of Company X and Company Y. The market data of the two companies are provided below: Market Data Net income (R) Shares outstanding Earnings per share (R) P/E Ratio Market price (R) 4.1. 4.2. 4.3. Company X 45 000 8 000 5.5 9 46 Company Y 65 000 2 000 3.5 15 46 Differentiate between business takeover and merging, also provide South African examples with justification for your answers. (6) Justify the wealth maximization rationale for using merger and acquisition as drivers? (4) Based on the above data, should Company X and Company Y merge? (10)

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41 A takeover happens when one corporation acquires another Friendly and hostile takeo... View the full answer