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Question,
Calculate the maximum premium to paid to Findon Flight using FCFE to value findon flight.
Scenario is Angmering compang want to acquire findon flight. The shareholder of findon flight will only accept the offer if the premium is 25% of the current value of the findon flight
Detail of Angmering compangy number of share 1000m, Current Share price 9.00 FCFE $1500m
Detail of Findon flight number of share 500m, Current Share price 3.8 FCFE $170m
Findon flight ke is 14% and growth rate is 4.9%
Angmering company is airline company, findon flight is similar to angmering.Angmering company market capitalisation of the annual FCFE will
increase 20% of the result of the acquisition of findon flight. Annual synergy is $30mThere is no point in setting test questions in this forum and expected an answer.
You must have an answer in the same book in which you found the question and so you should ask about what it is in the answer that you do not understand – then I will try and help you.
is not setting is actual from Dec 2016 i just want to know is possible to calculate by just have the target firm ke and growth rate?
I would need to see the whole question to give a proper answer, and the ACCA has not yet published it.
However, since it seems you are given the share price of the target, then the premium that the demand would seem easy.
To determine the maximum that the acquirer would be prepared to offer you need to calculate what the new market value of the combined company would be (including the synergy benefits).
Thank Sir, i think i miss out some important words, appreciate that you further explain.
Hopefully this question will be publish by acca.I hope so – I assume they will publish the hybrid September/December paper soon.
Sir, it didn’t came true Dec question 1 and 4 is published the morada and Fernhurst.
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