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Mongoose Itd is taking over Mamba itd. The shareholders of Mamba Itd would receive 0.75 shares of Mongoose lid for each share held by them.

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Mongoose Itd is taking over Mamba itd. The shareholders of Mamba Itd would receive 0.75 shares of Mongoose lid for each share held by them. The merger is not expected to yeld any economies of scale and operating synergy. The relevant data for the two companies are as follows Mongoose Mamba Net sales kesh Millions) 837.5 295 Profit after tax (ksh. Millions) 168 30 Number of shares 12,000,000 4.000.000 Earnings Per Share (EPS) (sh) 14 7.5 Market Value Per Share (sh) 75 60 P/E Ratio 5.36 8 Required: a) For the combined company (after merger). Calculate the (1) Total Number of Shares EPS P/E rato, () Market Value per share, iv) Total Market Capitalization (5 Marks) (5 Marks) (5 Marks) (5 Marks) (s Marks) b) Calculate the premium paid by Mongoose led to the shareholders of Mamba Itd. (Marks) Total 30 Marks) e

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