The directors of Standacone Limited have appointed you as a merger and acquisition specialist. They are considering the take-over of Allied Conveyors Limited and you are to advise them whether or not to proceed with the project.

The following market information is supplied to you:

Standacone Allied Conveyors

Earnings Per Share 315 c 252 c

Market price Per Share R4. 00 R 3.00

Number Of shares 3 million 1 million

Additional information:

Cash payment of R5 million to Allied Conveyors Limited

Synergy of R6 million will benefit the takeover

Required:

3.1 Calculate the value of the proposed take-over (3)

3.2 Calculate the net present value of the take-over (2)

3.3 Calculate the take-over premium (2)

3.4 Calculate the post-take-over market price of the share (3)

3.5 Calculate the post-take-over increase/decrease price of the share (2)

Assume the take-over was based on earnings per share

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

3.7 Calculate the total number of shares in the take-over (2)

3.8 Calculate the post-take-over earnings per share (4)

3.9 Calculate the benefits, if any, to the companies. (4)