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Share for share exchange premium calculation for targets shares

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Share for share exchange premium calculation for targets shares

  • This topic has 2 replies, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • February 27, 2017 at 6:03 am #374439
    Abdul Rafay
    Member
    • Topics: 29
    • Replies: 44
    • ☆☆

    Sir, my problem is with the different approach taken in the two questions, Sigra Co (12/12) & Hav Co (6/13) for the calculation of the percentage premium per share that the acquirees shareholders will receive.
    Both questions we had synergy benefits after acq and we had a share for share exchange option, however in Hav Co it includes cash amount per share.

    In Sigra Co, we added the equity value of both companies with the synergy benefits and divided it with the number of shares in the combined entity, then multiplied it with the ratio of share for share exchange to get the notional value of the acquirees shares.

    However, in Hav Co we just multiply the current share price of the acquiror to the ratio of the share for share exchange and add the cash amount per share to get the notional value of the acquirees shares.
    I followed Sigra co approach here and then added the cash amount per share to get a completely different value.

    Why are we following different approaches here?

    February 27, 2017 at 6:09 am #374440
    Abdul Rafay
    Member
    • Topics: 29
    • Replies: 44
    • ☆☆

    Oh got it, thanks sir! https://opentuition.com/topic/hav-co-june-2013/
    As usual explained beautifully!

    Don’t know what happened, I usually search a topic before posting it 🙂

    February 27, 2017 at 7:56 am #374486
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54679
    • ☆☆☆☆☆

    I am pleased you found my previous answer (and thanks for the comment 🙂 )

  • Author
    Posts
Viewing 3 posts - 1 through 3 (of 3 total)
  • The topic ‘Share for share exchange premium calculation for targets shares’ is closed to new replies.

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