The directors of Pieter Limited have appointed you as a merger and acquisition specialist. They are considering the acquisition of Parker Limited. You are to advise them whether or not to proceed with the project. The following information is available:

Pieter Limited Parker Limited

Market price per share R45.00 R37.00

Earnings per share R17.00 R14.60

No. of shares issued 8.5 million 7 million

Cash payment to Parker Limited = R153 million.

Synergy benefits of R45 million will accrue through the acquisition.

Parker Limited have just had their assets re-valued and the valuation has appreciated quite significantly

4.1 Discuss the possible tax gains from a merger and acquisition (4 marks)

4.2 Calculate the combined value of the proposed acquisition based on market value (2 marks)

4.3 Calculate the net present value of the proposal (2 marks)

4.4 Calculate the acquisition premium (2 marks)

4.5 Calculate the post-acquisition market price of the share (3 marks)

4.6 Calculate the post-acquisition increase/decrease price of the share (2 marks)

4.7 Calculate the exchange ratio based on earnings per share (3 marks)

4.8 Calculate the total number of shares in the proposed acquisition (2 marks)

4.9 Calculate the post-acquisition earnings per share (5 marks)