QUESTION TWO Pinky Retailers is a dairy company which is in the process of negotiating the acquisition of Brain Wholesal

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QUESTION TWO Pinky Retailers is a dairy company which is in theprocess of negotiating the acquisition of Brain Wholesalers. Themanagement estimates that the acquisition will result in economiesof scale and the additional benefits will amount to R36 000 000.Pinky Retailers is prepared to make a cash payment of R178 000 000for Brain Wholesalers. The following information is available forthe two companies: Pinky Retailers Brain Wholesalers Earnings pershare R64.00 R56.00 Number of shares 3 200 000 shares 2 750 000shares Market value per share R75.00 R60.00 2.1 Determine themarket price per share after the proposed take-over. (8 marks) 2.2Calculate the net present value of the proposed take-over. (3marks) 2.3 Calculate the take-over premium. (3 marks) Determine theexchange ratio based on earnings per share. (2 marks) Assume thatthe take-over (acquisition) was based on earnings per share. 2.4Calculate the benefits, if any, for both parties based on thepost-take-over earnings per share (9 marks) Assume that thetake-over (acquisition) was based on earnings per share.