Question $6$: Mergers And Acquisitions $[25$ Marks$]$

Kaizer $Ltd$ and Parrots $Ltd$ are companies listed $on$ the Gotham Stock Exchange $(GSE).$ The two companies operate $in$ the pharmaceutical industry. Kaizer would like $to$ take over parrots. Kaizer believes that the combined company would have more value. The market value $of$ Kaizer $is$ $$6$ billion dollars and $it$ has $an$ issued share capital $of6000000$ shares. Parrots $on$ the other hand has a market value $of$ $$1$ billion dollars and $an$ issued share capital $of200000$ shares. Kaizer $Ltd$ believes that the combined company will have a value $of$ $$8$ billion. The two companies have agreed $to$ a takeover value $of$ $$1,5$ billion dollars.

Required:

What effects will the takeover have $on$ the existing shareholders $of$ Kaizer $if$ Parrots $is$ acquired $by$:

I. new shares being issued $to$ existing shareholders $(7$ Marks$)$

$II.$ new shares being issued $to$ new shareholders $(3$ Marks$)$

III. borrowing $(7$ Marks$)$

$IV.$ share exchange $(8$ Marks$)$