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in finding gain of nente co , is it right to follow this way?? can i solve this problem the way we solved sigara?
mijs value 10000 shares * 4.8 = 48000
synergy =150
nente value 620 *15= 93000
total=57450divided by number of shares 10000+ 2/3 * 2400 =11600
57450/11600=4.95
share price = (2*4.95 -3* 2.9 )/ 3 =0.4
gain to nente = 0.4 /2.9 = 13.7% .i m getting 13.4% whereas examiner through bit diff approach got 17.9%
just how Sigara company gains are calculated (solved).Both Sigara and nente are from bpp revision kit.
It all depends whether we are looking at it from the point of view of the acquiring company, or from the point of view of the shareholders in the target company.
The acquiring company will be able to estimate the new value of their shares after the acquisition and will be things on this. The shareholders in the target company will not have that information and will base their decisions using the existing share price of the acquiring company.
If it is not made clear in the question which viewpoint to take, then state your assumptions and then you will still get the marks.
yes okay,but in nente co case the market price and p/e values are given so i am correct even though answer differs by 2% ?
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