On the morning of 1 October 2020, a rumor circulated through the financial press of a pending takeover announcement of textiles company Coleman Ltd by the conglomerate firm Lamba Ltd. The management team of Lamba Ltd confirmed the news at midday on 1 October 2020 but said that they were still deciding on the bid price and would inform the market the next day. Prior to this date, there was no expectation by the market that Coleman Ltd was a takeover target. No other price sensitive news relating to either firm was released on 1 October and the overall stock market index did not change between the close of business on 30 September and the close of business on 1 October It is the evening of 1 October 2020 and you are an analyst for an advisory firm that has been employed by Coleman Ltd to advise them on the transaction. Your initial analysis suggests that the benefits from the transaction will come from a reduction in costs associated with duplicate functions. Specifically, you believe that the present value of future administrative costs for the combined entity would be reduced from $80 million to $50 million. You have also gathered the following information to assist you in analyzing the deal. Lamba Ltd 20 million S8 Coleman Ltd Number of shares 10 million Share price as at 4:00 pm on 30 $5 September 2020 Share price as at 4:00 pm on 1 S6 October 2020 $8.30 When your supervisor sees the data you have collected she calls you into her office and makes a very strong point about not using the share price data from the 1 October 2020, but insists you use the data from 30 September 2020 in your analysis. 11. Briefly explain, in no more than 100 words, why your supervisor might insist that you use the data from 30 September 2020 instead of the data from 1 October 2020. (4 marks] 12. If the gains from the transaction were to be divided equally between the two firms, what cash price per share would Lamba Ltd have to offer Coleman Ltd shareholders? [3 marks] 13. At what cash offer price per share would all of the gains from the transaction be captured by Coleman Ltd shareholders? [2 marks) 14. Assuming that the gains from the transaction would be divided equally between the two firms, how many shares in Lamba Ltd would need to be offered in return for each share in Coleman Ltd? [5 marks)