Arcane Investments Ltd$,$ a diversified educational service provider, proposed an acquisition

offer of Tomes Ltd$,$ an academic book retailer. Arcane Investments Ltd offers an exchange

ratio of $0\mathrm{.}30,$ with its share price currently trading at R$60\mathrm{.}00$ and the target company, Tomes

Ltd$,$ trading at R$15,00.$ Tomes Ltd$$s board recommended that its shareholders only accept an

offer with a market premium over $10\%,$ as it considers its current share price to be

undervalued.

Determine the market premium and discuss the type of takeover Arcane Investments Ltd is

proposing. Argue whether Tomes Ltd should accept the offer, based on your calculations.