The directors of Ostrow Ltd have appointed you as a merger and acquisition specialist. They are considering the acquisition of Osborn Ltd. You are to advise them whether to proceed with the project. The following data is available: Ostrow LTD Osborn LTD Market price per share R10,00 R8,00 Earnings per share R3,00 R2,40 No.shares issued 2 million 0,5 million Additional information: Cash payment to Ostrow Ltd = R12 million. Synergy benefits of R10 million will accrue through the acquisition. Ostrow Ltd has just had its assets re-valued and the valuation has appreciated quite significantly. a) Calculate the acquisition premium. b) Calculate the post-acquisition market price of the share c) Calculate the post-acquisition increase/decrease price of the share

The directors of Ostrow Ltd have appointed you as a merger and acquisition specialist. They are considering the acquisition of Osborn Ltd. You are to advise them whether to proceed with the project. The following data is available: Ostrow LTD Osborn LTD Market price per share R10,00 R8,00 Earnings per share R3,00 R2,40 No.shares issued 2 million 0,5 million Additional information: Cash payment to Ostrow Ltd = R12 million. Synergy benefits of R10 million will accrue through the acquisition. Ostrow Ltd has just had its assets re-valued and the valuation has appreciated quite significantly. a) Calculate the acquisition premium. b) Calculate the post-acquisition market price of the share c) Calculate the post-acquisition increase/decrease price of the share

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter23: Corporate Restructuring

Section: Chapter Questions

Problem 7P

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