The shareholders of Bee-Bee Company have voted in favour of a buyout offer from Honey Ltd. The information pertinent to each firm is as follows:

Data

2.1.1 What will the EPS of Honey be after the merger? (4)

2.1.2 Calculate Honeys share price and PE ratio if the NPV of the acquisition is zero. (6)

Bee-Bee

4 120 000

R 360 000

Bee-Bee shareholders will receive one share in Honey for every share they hold.

PE Ratio

Share in Issue Earnings (after tax)

12

240 000

R 720 000

1

Honey

2.1.3 What is the value of Bee-Bee to Honey?