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QUESTION $2$

$(25$ MARKS$)$

H$1$ Lid is a listed company with $2600000$ shares issued to shareholders. Shares trade at R$11,75$ per share and shareholders are satisfed with the earnings of R$4$ per share. With the stong market demand for the solar solutions developed by H$1$ LAd, SKY Lid developed a simlar product, though of lower quality, started affecting the sales forecasting of H$1$ Ltd negatively. SKY LUs's share price increased to R$8,50$ per share in the last month on the $650,000$ shares issues and the sharehoiders are ecstatic with the eamings of R$3,95$ per share. The board of directors of H$1$ Lid is considering a taie$-$over of SKY Les as a strategy to elminate the competition. A cash payment of R$8250000$ will be processed to SKY Les and the synergy benefits from the acquisition are estimated at R$11500000,$ consisering that the assets of SXY tut should stit be revalued atter the takeover.

Required:

$2\mathrm{.}1$ Calculate the combined value of the proposed acquistion.

$(3$Marks$)$

$22$ Compute the net present value of the proposal.

$(2$ Marks$)$

$2\mathrm{.}3$ Determine what the acquisition premium is$.$

$(2$ Marks$)$

$2\mathrm{.}4$ Calculate the post$-$acquistion market price per share.

$(3$ Marks$)$

$25$ Establish the post$-$acquistion increaseldecrease price of the share.

$(2$ Marks$)$

$2\mathrm{.}6$ It the acquistion is based on the Earings Per Share $-$

$2\mathrm{.}5\mathrm{.}1$ Calculate the exchange ratio based on the EPS. Donot round up your answer $($report at four decimal places$)$

$(2$ Marks$)$

$202.$ Determine the total number of shares in the proposed acquistion

$(2$ Marks$)$

$2\mathrm{.}6\mathrm{.}3$ Compute the post$-$acquistion EPS

$(2$ Marks$)$