Company A plc intends to acquire company B plc by a takeover by shares or cash purchase. The takeover will enable post-tax synergies (with present value) of $5bn to be achieved. The companies are unlevered and they do not have any common transaction. The pre-bid valuations of A and B are detailed: A plc B plc A&B Share price 825 1,100 30 20 No of shares (millions) 24.75 22 ? Market value (billions) 5.5 4 Earnings (billions) PE ratio 4.5 5.5 A plc is considering two possible bids: A cash deal at $1240 for each B share (financed entirely with cash on balance sheet) A5 for 4 share exchange of A for B shares Required: i) Fill the column for A&B where there are the question marks. (5 marks) ii) Calculate the gains or losses for A and B in each case. (12.5 marks) Calculate the post-deal earnings per share for each alternative. Which deal might be preferred and why? (7.5 marks) (Total marks 25) iii )