The board of Eastern plc wishes to take over Best Ltd. Shown below are summarised financial data for the two companies: Profit before interest and tax Ordinary share dividends Corporate tax rate Financial position statement extracts: Eastern plc USD420,000 6.9p 35% Best Ltd USD200,000 14.Op 35% Best Ltd Eastern plc 1,750,000 800,000 2,550,000 Non-current assets Current assets Total assets Equity Ordinary shares (USD1) Reserves 800,000 500,000 1,300,000 1,500,000 600,000 2,100,000 500,000 400,000 900,000 200,000 200,000 1,300,000 10% bonds Current liabilities Total liabilities 450,000 2,550,000 Eastern's earnings and dividends have been increasing at 15 per cent per year in recent times, while over the same period the earnings and dividends of Best have remained static. The current market price of Eastern's ordinary shares is USD1.60. The board of Eastern believes that Best shareholders will accept a share-for share offer of four shares in Eastern for every five shares in Best. (a) Using the asset base and the market base valuation models, determine the effect on the wealth of Eastern ple's shareholders if Best Ltd's shareholders accept the proposed share-for-share offer. (b) Critically discuss the economic reasons why one company may seek to take over another. Critically discuss which factors will influence a company to finance a takeover by either a share- for-share offer or a cash offer financed by an issue of bonds. Provide three explanations for the failure of acquisitions to enhance shareholder value. (5 marks