Whitehill Publishing, a publisher of academic textbooks, has made an offer to acquire Yellowtape, a publisher of childrens books. The management teams at both companies have tentatively agreed upon a transaction value of Rs 56 per share for Yellowtape but are presently negotiating alternative methods of payment. Data used for the analysis of the transaction is given below

	Whitehill Publishing	Yellowtape
Pre-merger Stock Price	Rs 80	Rs 48
Number of shares outstanding (millions)	30	20
Pre-merger market value (millions)	Rs 2,400	Rs 960

Once the merger is completed, Mr. Bhatia, the CEO of Whitehill Publishing, plans for Whitehall to take on all of Yellotapes assets and liabilities and the combined company will continue to operate under the Whitehill Publishing name. Mr. Bhatia estimates that cost reduction synergies as a result of the merger will total approximately Rs 180 million.

1. Briefly define the form of integration and type of merger in this transaction.

(2 marks)

2. If the deal is completed as a cash transaction, the amount of the gain for Yellowtapes shareholders.

(1 mark)

3. If the deal is completed as a stock transaction with an exchange ratio of 0.7, the amount of the gain for Whitehalls shareholders.