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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Sigra co(12/12) and Nente(6/12).
In both question the approach for calculating the percentage gain to shareholder of target company is different.(Share base offer)
In Sigra co it use the share price x no. of share for calculating the after acquisition share price
where as in Nente it use the Earning(and then Eps) for calculating after acquisition share price
Why there is different?
It depends from whose perspective we are looking.
The company doing the acquiring will have information enabling them to forecast the new share price, and this will then determine what they can afford to offer.
The shareholders of the company being acquired will not have the information and so will base their thinking on the existing share price.
The wording of the questions is not as clear about this as it could be, and so you would get credit whichever you had taken.