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Sigra co(12/12) and Nente(6/12).

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Sigra co(12/12) and Nente(6/12).

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by AvatarJohn Moffat.
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  • June 8, 2016 at 10:29 pm #321232
    Avatarhisham503
    Participant
    • Topics: 35
    • Replies: 55
    • ☆☆

    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?

    June 9, 2016 at 8:44 am #321356
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54836
    • ☆☆☆☆☆

    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.

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