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Sucre Ltd has recently bid GHS 1.2bn for a Sel Ltd, a long established mutual...

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Finance

Sucre Ltd has recently bid GHS 1.2bn for a Sel Ltd, a long established mutual organization (that is owned by its members) that is the countrys leading motoring organization with a market value of 1 billion cedis in present value terms. Sel Ltd is financed primarily by an annual subscription to its 4.4 million members whilst it also obtains income from a range of other activities such as high profile car insurance brokerage, travel agency and assistance with all types of travel arrangements. If this acquisition goes through the combined value of the firm would be 9.2 billion cedis

  1. What defenses are available to shareholders against the takeover of their companies?
  2. Discussion the possible reasons why Sucre Ltd is seeking to buy Sel Ltd
  3. Discuss the potential advantages from acquisitions of this nature
  4. Supposing the acquisition were successful determine the Net Present Value of the Transaction, the cost to the parent company, the gain from the acquisition and how the gain would be shared stating clearly your assumptions

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