QUESTION FOUR The directors of Nonno Ltd have appointed you as a merger and acquisition specialist. They are considering the acquisition of Tonno Ltd. You are to advise them whether or not to proceed with the project The following information is available: Nonno (Ltd) Tonno (Ltd) R10.00 R8.00 Market price per share Earnings per share No. of shares issued R3.00 R2.40 2 million 0.5 million Cash payment to Tonno Ltd = R12 million. Synergy benefits of R10 million will accrue through the acquisition. Tonno Ltd have just had their assets re-valued and the valuation has appreciated quite significantly Required: Assume the acquisition is based on market values with a cash payment: 4.1 4.2 4.3 Calculate the post-acquisition increase/decrease price of the share Calculate the exchange ratio based on earnings per share Calculate the total number of shares in the proposed acquisition Calculate the post-acquisition earnings per share 4.4