Gee-em (Ltd). The Fordy (Ltd), an automotive manufacturing company is in the process of negotiating the acquisition of 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: Earnings per share Dividend per share Growth rate Market price per share No. of shares issued Fordy R2.40 R2.00 11% R25.00 8 million 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 post- acquisition earnings per share. Gee-em R1.80 R0.90 5% R12.50 5 mi 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 year's expected price without the acquisition. Should the acquisition take place? Justify your answer. (2 marks) (2 marks) (6 marks) (5 marks) (4 marks) (6 marks)