Q1. Globally, companies continuously explore ways to be more efficient and effective to survive the challenging global competition. Some resort to mergers and acquisitions to survive. In the light of this, S.B. Company Ltd and Prestige Ltd are planning to merge to form Alliance Ltd. It has been agreed that S.B. Company's shareholders will accept three shares in Prestige for every share in S.B. Company they hold. Other details are as follows: Prestige Ltd S.B. Company Ltd Number of shares 40m 10m Annual earnings GH10m GH5.8m P/E ratio 8 10 Post-merger annual earnings of the enlarged company are expected to be eight per cent higher than the sum of the earnings of each of the companies before the merger, due to economies of scale and other benefits. The market is expected to apply a P/E ratio of 9 to SBLL Ltd. (4 Required: a) Explain to the stakeholders of both companies the justification on for the following integration strategies in mergers and acquisitions. i) Horizontal take-over. marks) ii) Vertical backward and forward take-overs. (4 marks) iii) Conglomerate mergers. (2 marks)