Question
FGV Plantation Bhd plans to merge with TH Plantation Bhd. Based on the agreement, the exchange ratio will be based on earnings per share. The
FGV Plantation Bhd plans to merge with TH Plantation Bhd. Based on the agreement, the exchange ratio will be based on earnings per share. The balance sheets of both companies as per below:
|
| FGV Plantation Bhd (RM000) | TH Plantation Bhd (RM000) |
| Current Assets | 2,200 | 1,800 |
| Fixed Assets | 3,000 | 2,000 |
|
| 5,200 | 3,800 |
|
|
|
|
| Current Liabilities | 500 | 600 |
| Long term liabilities | 400 | 500 |
| Common Stocks | 1,500 | 700 |
| Premium | 700 | 400 |
| Retained earnings | 800 | 500 |
|
| 3,900 | 2,700 |
| Additional information: | FGV Plantation Bhd (RM000) | TH Plantation Bhd (RM000) |
| Par value | RM5 | RM 4 |
| Price earnings ratio | 6 times | 3 times |
| Market per share | RM 24 | RM 9 |
i) Calculate the earnings per share for both companies
ii) Calculate the new number of shares outstanding (NOSO) for target company
iii) Calculate the value common stock for target company
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started