SA Candy, a specialising in the manufacture and distribution of hard candy, is listed on the local stock exchange. The leadership in SA Candy has its eye set on acquiring CT Delights, a company in the same industry as SA Candy, but specialising in the manufacturer and distribution of chocolates. The leadership in SA Candy are convinced that the two companies will make a perfect fit and because they are in the same industry and can easily deliver benefits through production efficiencies worth R20m. Information on the two companies can be found in the table below. Should A Candy succeed in acquiring CT Delights, it will do so via a share exchange which will see SA Candy offering CT Delights 500 000 shares in SA Candy for all share in CT Delights

SA Candy CT Delights

Current Value R80m R37,5m

Current Earnings R10m R5m

Shares outstanding 1 000 000 1 500 000

Current Share Price R80 R25