Question
Procta Ltd is determined to report earnings per share of R9.5. It therefore acquires JJ&J Company. You are given the following facts Proctas Ltd JJ&J
Procta Ltd is determined to report earnings per share of R9.5. It therefore acquires JJ&J Company. You are given the following facts
| Proctas Ltd | JJ&J | Merged firm | |
| Earnings per share | R6.50 | R8 | R9.50 |
| Price per share | R36 | R21 | ? |
| Price-earnings ratio | 18 | 7 | ? |
| Number of shares | 50000 | 60000 | ? |
| Total earnings | R325,000 | R480,000 | ? |
| Total market value | R5,850,000 | R3,360,000 | ? |
Once again there are no gains from merging. In exchange for JJ&J shares,Proctas Ltdissues just enough of its own shares to ensure its R2.67 earnings per share objective.
a. Complete the above table for the merged firm.
c. What is the cost of the cash offer if proctas ltd paid R2500000 for JJ&J?
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Essentials Of Advanced Financial Accounting
Authors: Richard Baker
1st Edition
0078025648, 9780078025648
