Dundee (Ltd) is a dairy company which is in the process of negotiating the acquisition of
Glencoe (Ltd). The management estimates that the acquisition will result in economies of scale
and the additional benefits will amount to R30 million. Dundee (Ltd) is prepared to make a cash
payment of R55 million for Glencoe (Ltd). The following information is available for the two
companies:
Required:
2.1 Calculate the value of the take-over. (4 marks)
2.2 Calculate the net present value of the proposed take-over. (3 marks)
2.3 Calculate the take-over premium. (3 marks)
2.4 Determine the market price per share after the proposed take-over.