Casper Oil, a refiner of cooking oil is contemplating the acquisition of Smichel Oil by means of a share issue. The combination of the two firms' operations will result in economies of scale and the additional value generated is estimated to be R72 000 000. It was agreed that the purchase consideration for the Smichel Oil acquisition should be based on an exchange of 1.2 shares of Casper Oil for each share of Smichel Oil. Key acquisition data is detailed below: Company No.of shares Price per share Earnings after Tax Casper Oil 16 million R32 R26 million Smichel Oil 12 million R28 R19 million Required: 1 Calculate the combined value of the proposed acquisition.

2 calculate the total number of shares in the proposed acquisition

3 Determine the proposed post-acquisition market price per share

4 Will the shareholders Casper Oil be happy with this price and why

5 How much will the shareholders of Smichel Oil gain or lose on a per share basis

6 Determine the purchase price of Smichel Oil that is implied by the 1.3 exchange ratio

7 Calculate the net present value of the proposed acquistion

8Calculate the proposed acquisition premium. 9 Compute the earnings per share for Casper Oil before and after the proposed acquisition.