Case: Timken India and ABC Bearing Merger Timken India, a subsidiary of The Timken Company, a maker of engineered bearings and mechanical power transmission products, has entered into a definitive agreement to acquire ABC Bearings through a court-approved amalgamation process. ABC Bearings is a manufacturer of tapered, cylindrical and spherical roller bearings, and slewing rings. Richard G. Kyle, Timken, President and Chief Executive Officer, said: "Timken is a leader in the India bearing market and the acquisition of ABC Bearings will expand our capacity, our customer base and locally produced produs: breadth He further added: "The demand to increase participation in local and export markets. "The prospective merger demonstrates our commitment to invest in and grow our business in India" said Sanjay Koul, Chairman and Managing Director. Timken India. "The addition of the ABC Bearings portfolio will strengthen bearings in India is growing, and the addition of ABC Bearings will provide us with dhe abili our innovative and competitive solutions to serve our customers. The merger will give Timken a business that will help it meet increasing demand for its products and a bigger portfolio, access to new domestic and export markets and a higher market share the company said in its disclosure. "Both companies get each other's niche expertise thus supplementing and complimenting their offerings.

ABC India shareholders will get exposure to a multinational company in the bearing sector. where the long-term prospects are good. ABC Bearings will be moving from a single-iane road to super expressway Deal Financial (as on 4th July 2017- announcement date) Timken India Ltd.

	Timken India	ABS Bearing
Adjusted Closing Price	$675.95	$238.1
Shares Outstanding (in millions)	68	11.55
EPS	$12.7	$8.22
P/E	53.22	28.98
EAT (in millions)	$863.6	$94.94
Market Capitalization (in millions)	$45964.59	$2750.05

Note: Shareholders of ABC Bearings will get five shares of Timken India for eight shares held.

Answer the following questions based on above information:

1. Identify the type of deal.

2. Comment on the synergies, expected from the deal (qualitative).

3. Calculate Market value of exchange and premium offered.

4. Calculate implied PE.

5. Show the accretion and dilution in EPS of both the companies post-M&A should be the offer price, if acquirer wishes to prevent its EPS dilution?

6. Calculate MPS of the entity after acquisition, assuming weighted PE to be PE after acquisition.

7. Price of combined entity is expected to be Rs 900 after M&A, calculate the synergies from M&A. and NPV for acquirer and target.

8. If the exchange ratio is fixed, show the impact, if price of Timken India rises to Rs 780.

9. Shares of ABC Bearings hit the 20 percent upper limit for the second straight day. The stock has gained 90 percent so far this year. Timken India rose as much as 5.4 percent. What could be the reasons for this behaviour?