(25 Marks) QUESTION 3 The directors of Peru Holdings have appointed you as a merger and acquisition specialist. They are considering the acquisition of Bala Conveyors Limited. You are to advise them whether to proceed with the project The following information is available: Peru Balla Holdings Conveyors Market price per share R 10.00 R 8.00 Earnings per share R3.00 R 2.40 No. of shares issued 4 milion 7 milion Cash payment of R16 million to Balla Conveyors Synergy benefits of R12 milion will accrue to the acquisition Required Assume the acquisition is based on market values with a cash payment 3.1 Calculate the combined value of the proposed acquisition (2 marks) 3.2 Calculate the net present value of the proposal (2 marks) 3.3 Calculate the acquisition premium (3 marks) 3.4 Calculate the post-acquisition market price of the share 3 marks) 3.5 Calculate the post-acquisition increase decrease price of the share. Assume the acquisition is based on earnings per share. (3 marks) 3.6 Calculate the exchange ratio based on earnings per share (3 marks) 3.7 Calculate the total number of shares in the proposed acquisition (3 marks) 3.8 Calculate the post-acquisition earnings per share. (3 marks) 3.9 Calculate the benefits, if any, to the two parties