Buden plc is a dynamic, expanding business. Spa ple is a solid but unambitious one operating in the

same industry. Buden ple has recently launched a takeover bid for Spa ple. The offer is that Buden ple

will give one of its shares to shareholders in Spa ple for every three of their shares.

After$-$tax cost savings are estimated to be $$8$ million p$.$a$.$ as a result of administrative efficiencies,

compared with the total costs historically incurred by the two businesses. Surwararised financial

statements for the two businesses for the year just ended are as follows:

Profit and loss account as at $30$ April Year $1$

Balance sheet as at $30$ April Year $1$

Financial analysts believe that, following the takeover, the $\frac{P}{E}$ ratio of Buden ple will be $16.$

Required

Assuming that the market value of their shareholdings is the only factor of concern; would the

shareholders of each business welcome a successful takeover?