PLEASE REVIEW INFORMATION AND PROVIDE ANSWERS TO QUESTION 1.5, 1.6, 1.7, 1.8 AND 1.9

APPLY THE EXCHANGE RATE (NB!) ON 1.6 & 1.7

SECTION A [100 MARKS] Answer ALL the questions in this section. QUESTION ONE Clover Limited, a software development company is contemplating the acquisition of Pamalat Limited by means of a share issue. The combination of the two firms' operations will result in economies of scale and the additional value generated is estimated to be R84 000 000. It was agreed that the purchase consideration for the Palmalat Limited acquisition should be based on an exchange of 1.5 shares of Clover Limited for each share of Palmalat Limited. Key acquisition data is detailed below: 1.1 Calculate the combined value of the proposed acquisition. (3 marks) 1.2 Calculate the total number of shares in the proposed acquisition. (2 marks) 1.3 Determine the proposed post-acquisition market price per share. (2 decimal places) (2 marks) 1.4 Will the shareholders of Clover Limited be happy with this price? Why? (2 marks) 1.5 How much will the shareholders of Palmalat Limited gain or lose on a per share basis. (2 marks) 1.6 Determine the purchase price of Palmalat Limited that is implied by the 1.5 exchange ratio. (3 marks) 1.7 Calculate the net present value of the proposed acquisition. (4 marks) 1.8 Calculate the proposed acquisition premium. (3 marks) 1.9 Compute the earnings per share for Clover Limited before and after the proposed acquisition. (4 marks) Assume that the earnings after tax after the proposed acquisition is R45 000000