Vodacell wishes to acquire NTN cell. The takeover is a hostile takeover by Vodacell, as NTN shares have been dropping significantly due to a fraudulent contract that NTN signed up using unregistered simcards.

The take-over will take place through an issue of shares in Vodacell. The following information is also available:

• The Earnings Per Share for Vodacell and NTN is R4.00 and R4,50 respectively.
• The market value per a share for Vodacell and NTN is R12.00 and R30.00 respectively.
• The number of shares in issue for Vodacell and NTN is 5 000 000 and 400 000 respectively.

The synergies that Vodacell will benefit from is valued at R1 600 000 if they merge with NTN.

Required:

1. Calculate what exchange ratio NTN shareholders will wish to achieve if they wanted to maximize on the total benefit of the merger. (10 marks)

2. Advise NTN on what remedies they can take to combat the hostile take-over and avoid being a predator of Vodacell.

(5 marks)