QUESTION 4 (25 Marks) ABC (Ltd) is a dairy company which is in the process of negotiating the acquisition of XYZ (Ltd). The management estimates that the acquisition will result in economies of scale and the additional benefits will amount to R30 000 000 ABC (Ltd) is prepared to make a cash payment of R55 000 000 for XYZ (Ltd). The following information is available for the two companies: ABC (Ltd) XYZ (Ltd) Earnings per share R5.00 R4.00 Number of shares 5 000 000 3 000 000 Market value per share R15.00 R12.00 Required: 4.1 Calculate the value of the take-over. 4.2 Calculate the net present value of the proposed take-over. 4.3 Calculate the take-over premium. 4.4 Determine the market price per share after the proposed take-over. (4 marks) (3 marks) (3 marks) (3 marks) Assume that ABC (Ltd) propose to its shareholders that they are willing to peruse a hostile takeover of XYZ (Ltd). 4.5 Determine Six (6) takeover defenses that XYZ (Ltd) can utilize as a tactic to resist the takeover attempts of ABC (Ltd). (12 marks) QUESTION 4 (25 Marks) ABC (Ltd) is a dairy company which is in the process of negotiating the acquisition of XYZ (Ltd). The management estimates that the acquisition will result in economies of scale and the additional benefits will amount to R30 000 000 ABC (Ltd) is prepared to make a cash payment of R55 000 000 for XYZ (Ltd). The following information is available for the two companies: ABC (Ltd) XYZ (Ltd) Earnings per share R5.00 R4.00 Number of shares 5 000 000 3 000 000 Market value per share R15.00 R12.00 Required: 4.1 Calculate the value of the take-over. 4.2 Calculate the net present value of the proposed take-over. 4.3 Calculate the take-over premium. 4.4 Determine the market price per share after the proposed take-over. (4 marks) (3 marks) (3 marks) (3 marks) Assume that ABC (Ltd) propose to its shareholders that they are willing to peruse a hostile takeover of XYZ (Ltd). 4.5 Determine Six (6) takeover defenses that XYZ (Ltd) can utilize as a tactic to resist the takeover attempts of ABC (Ltd). (12 marks)