Question 4 (25 marks) On 31 October 2019, Open Ltd announced that it has agreed to acquire the business of Close Ltd in 5 markets: Singapore, Hong Kong, China, Taiwan and Indonesia. The transaction is targeted for full completion in all markets by early 2020. In Hong Kong, the transfer is expected to be completed in September 2020. There are the synergy of $60,000, mostly from cuts in back-office and administration. Open Ltd is interested in the possible acquisition of Close Ltd for $10 per share. Close Ltd's market value is $160,000 and it has 20,000 shares. Open Ltd's market value is $300,000 and it has 15,000 shares outstanding. Required: (a) Suppose Close Ltd receives $200,000 in cash. Compute Open Ltd's stock price before and after the acquisition. (6 marks) (b) Suppose Close Ltd receives $200,000 in Open Ltd's stock, based on the pre-acquisition price. Determine Open Ltd's stock price after the acquisition. (7 marks) (8 marks) (c) Comment on the statement "Diversification is a good reason for merger". (d) Suppose Close Ltd offers poison pills to its managers. Discuss whether it is good or bad for shareholders of Close Ltd. (4 marks)