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Question 3: Wild Corporation is in the process of acquiring Tamed Inc. Tamed Inc. has two divisions: food manufacturing and retail grocery. The current number of outstanding shares is 200. a) (8 marks) What do you recommend for the total value of the food division? What about the retail grocery division? b) (7 marks) The management of Tamed Inc. has informed us that the Cost of goods sold for the Retail Grocery division was abnormally high this year due to the temporary closure of one of the local suppliers. We expect a much lower Cost of goods sold for that division in the future. Given this information, what do you recommend for the total value of the food division? What about the retail grocery division? c) (3 marks) Wild Corporation is offering $92 per share. Given the information in part (b), would you recommend the shareholders of Tamed Inc. to accept the offer or decline it? Why? Statement of Comp. Income (Food Statement of Comp. Income (Retail Statement of Comp. Income Manufacturing Division Grocery Division (Consolidated Statement) Sales 2,000 ales .500 Sales 4,500 Cost of goods sold 700 Cost of goods sold 1,400 Cost of goods sold 2100 Depreciation 300 Depreciation 500 Depreciation 800 EBIT 1,000 EBIT 600 EBIT 1,600 Interest paid 200 Interest paid 100 Interest paid 300 Taxable income 800 Taxable income 500 Taxable income 1.300 Taxes (40% ) 320 Taxes (40%) 200 Taxes (40%) 520 Net Income 480 Net Income 300 Net Income 780 Companies similar Industry Price-to-earnings ratio Price/Sales ratio to Tamed Inc. CA. Shop Co. Grocery 14 3 Sunny Co. Grocery 15 3.5 Raspberry Co. Food 18.5 5 Pasta Inc. Food 18 4.5 Shop WithUS Co. Grocery 14.5 4 PeachPerfect Inc. Food 19 6