Barney Plc has issued share capital of 150,000 ordinary shares. These shares were valued at 40 each on 1st February this year, reflecting Barney Plc's value as a stand-alone business.

On 10th February, Amazon Plc, a competitor of Barney Plc, announces that they are considering a takeover bid for Barney Plc. The market reacts positively to this news, and Barney Plc's share price increases to 48 per share as a result of this announcement.

Total benefits of 4.2 million are anticipated to result from Amazon's acquisition of Barney Plc. On 20th February, Amazon Plc completes its acquisition of Barney Plc, with a cash bid of 8 million.

Determine how the benefits of the acquisition are allocated between Amazon Plc shareholders and Barney Plc shareholders, based on the information above.

		2,000,000 to Amazon and 2,200,000 to Barney
		3,400,000 to Amazon and 8,000,000 to Barney
		2,200,000 to Amazon and 5,800,000 to Barney
		2,200,000 to Amazon and 2,000,000 to Barney

Aquatic Plc has a PE ratio of 10 as stand-alone business and a share price of 18 per share. Bayonet Plc has a PE ratio of 5 as a stand-alone business and a share price of 6 per share.

Assume now that Aquatic Plc acquires Bayonet Plc in a one for three share for share exchange. No benefits are expected from the merger.

Assuming the market is efficient, which of the following will transpire in the post-acquisition group?

		An increase in EPS and an increase in share price
		No change in EPS and no change in share price or PE ratio
		EPS of overall group will increase and PE ratio of overall group will decrease
		Share price of post-acquisition group will be higher than the pre-acquisition share price of Aquatic. EPS of post-acquisition group will be lower than the pre-acquisition EPS of Aquatic Plc.