Opao co – dec 18

Equity value prior to acquisition :

tai co = 1000 , no. of shares = 263 , value per share = 3.80
Opao = 5000 , no of shares = 2000 , value per share = 2.5

Equity value of combined co after acquisition: 6720m

While calculating the % gain for the shareholders under the cash offer ( 4.40 for each tai co share) the examiner has used the following method :

Tai Co shareholders, percentage gain
($4.40 – $3.80)/$3.80 = $0.60/$3.80 = 15.8%

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Would I lose marks if I did as follows?

Combined equity value = 6720
value to Tai co shareholders = 1157.2 (263*4.40 )
pre acquisition value of tai co = 1000

So % gain = 1157.2/1000 = 15.72%.