Fordy (Ltd), an automotive manufacturing company is in the process of negotiating the acquisition of Gee-em (Ltd). The management estimates that the acquisition will result in economies of scale and the additional benefits will amount to R20 million. The following information is available for the two companies: Fordy Gee-em Earnings per share R2.40 R1.80 Dividend per share R2.00 R0.90 Growth rate 11% 5% Market price per share R25.00 R12.50 No. of shares issued 8 million 5 mi Required: (round off to two decimal places, where applicable) 1.1 Calculate the exchange ratio based on market values. 1.2 Calculate the exchange ratio based on earnings per share. 1.3 Calculate the post-acquisition earnings per share (EPS), based on 1.2 above 1.4 Calculate the benefits, if any, to the companies. 1.5 Assume that Fordy agree to a one-for-one exchange of shares, calculate the expected postacquisition earnings per share. 1.6 Assuming a post-acquisition Price/Earnings Ratio (P/E) of 12, calculate the expected post-acquisition market price and compare it to next years expected price without the acquisition. Should the acquisition take place? Justify your answer.