Financial Accounting Evaluation Of Proposed Acquisition Homework Help
- October 17, 2017
- Posted by:
- Category: Accounting QA
Best UK USA UAE Australia Canada China Financial Accounting Evaluation Of Proposed Acquisition Homework Help Service Online
Margate Group plc is a large, long-established company whose primary interests are in transport and distribution within the United Kingdom. It is considering a bid to acquire Hastings plc, a company also in the transport and distribution industry. Hastings plc, however, has a strong operations base in Europe as well as in the UK. Both companies are listed on a recognised stock exchange. They both have a wide share ownership including many institutional investors.
Hastings plc has recently fought off a bid from a company based in the United States of America and has made a public statement that it will defend itself against any future bids. The company has recently won a fiercely contested five-year contract to undertake transport and distribution services for a major supermarket group. Margate Group plc also tendered for this contract. Press comment suggests this contract will allow Hastings plc’s earnings to grow at 10% a year for at least the next five years. However, some industry experts believe Hastings plc tendered a price that was so low that the contract could result in very little profit, or even losses.
If the acquisition were to succeed, it would create the largest company of its kind in the UK. A concern is that this would attract the interest of the competition authorities. However, as both companies have recently restructured their operations, redundancies are likely to be few and concentrated mainly in central administration.
Financial Statements
Key financial information for the two companies for the latest financial year is given below. All figures are in £ million unless otherwise stated.
STATEMENTS OF PROFIT OR LOSS
FOR THE YEAR TO 31 AUGUST 20X1
Margate Group plc Hastings plc
£m £m
Revenue 2,763 1,850
Operating costs 1,950 1,380
Operating profit 813 470
Net interest 125 85
Profit before tax 688 385
Tax 185 85
Earnings 503 300
Dividends declared 201 135
Retained profit for the year 302 165
Earnings per shares (pence) 47.90 35.29
EPS for year to 31 August 20X0 (pence) 34.85 29.50
STATEMENTS OF FINANCIAL POSITION AT 31 AUGUST 20X1
Margate Group plc Hastings plc
£m £m
Non-current assets (net book value) 3,250 2,580
Current assets
Inventory 125 175
Receivables 550 425
450 45
Payables: due within 1 year
Bank overdraft 0 420
Trade payables 755 365
Payables: due after 1 year
Debentures 1,450 950
Tax 150 40
Net assets 2,020 1,450
Capital and reserves
Share capital (£1 each) 1,050 850
Share premium 220 150
Retained earnings 750 450
Total shareholders’ funds 2,020 1,450
Note. Margate Group plc’s debenture is 8%, repayable 20X5. Hastings plc’s is 9%, repayable 20X4.
Share price information (prices in pence)
Margate Group plc | Hastings plc | |
Share price movements: High for last financial year | 705 | 590 |
Low for last financial year | 470 | 440 |
Share price today (20 November 20X1) | 671 | 565 |
P/E ratios today | 14 | 16 |
Equity betas Other information | 1.1 | 1.2 |
• The average P/E for the industry is currently estimated as 13.
• The return on the market is currently estimated as 12%, the risk-free rate as 6%. These rates are expected to remain constant for the next 12 months and are post-tax.
• The average debt ratio for the industry (long-term debt as proportion of total long-term funding) is 30% based on book values.
• Economic forecasts provided by Margate Group plc’s financial advisors expect inflation and interest rates to remain at their current levels for the foreseeable future. Inflation is currently 2% a year.
Terms of the proposed bid
Margate Group plc’s directors are planning to offer a share exchange to Hastings plc’s shareholders.
How it Works?
How it Works?
Step 1:- Want to buy solution for this. Please click on submit your assignment here and then fill all details and please mentioned product code at the end of the case. Product code is extremely important to locate your assignment. You can also mail us by keeping product code as mail subject to besthomewrokhelpers@gmail.com
Step 2:- As soon as we received your details, we will inform you with through email about quotations of the given assignment. Requesting you to please mention your budget. Also ensure our email besthomeworkhelpers@gmail.com should not go into your spam folder.
Step 3:- Once you agree with our price, click on pay now and pay the agreed amount and once we received the payment assignment will be delivered before agreed deadline.
Step 4:-You can also call us in our phone no. as given in the top of the home page or chat with our customer service representatives by clicking on chat now given in the bottom right corner.
Features
Our Features for Assignment Help Services
Plagiarism Free Solution
The first and foremost things that we promise to our customer is plagiarism free solution i.e. a complete and unique solution as per customer’s university requirements.
Excellent Customer Care Services
You can feel our responsiveness once you use our service. Our team of excellent and dedicated customer service representatives are always ready to provide best customer care service 24X7 . Just drop a mail to besthomeworkhelpers@gmail.com and you can receive response in just no time.
Multiple Stage Quality Assurance
We design a unique multiple stage quality assurance team to ensure plagiarism free, original, relevant and as per customer’s requirements. We not only give importance to accurate solutions or writing but also we give equal importance to references style too.
Privacy and Confidentiality
We believe in maintaining complete privacy and confidentiality of all our clients. None of the information furnished to us is shared with anyone else.
Our Clients
We receive requests from clients all over the World. Most of our customers are from USA, UK, Australia, Canada, UAE, Muscat, Oman, Qatar, UAE, New-Zealand, France Germany etc.
Related Services
- Accounting Homework Help
- Accounting Assignment Help
- Computer Science Homework Help
- Management Homework Help
- Finance Assignment Help
- Online Essay Writing Help
- Strategic management case study help
- Case Study Assignment Help
- Dissertation Writing Help
- Trade finance case study help
- Project Management Assignment Help
- Mechanical Engineering Homework Help
- Online Quiz Help
- Maths homework Help
- Online Exam Help
- Economics Assignment Help
- Economics Homework Help
- English Homework Help
- Macroeconomics Homework Help
- Microeconomics Homework Help
- Statistics Assignment Help
- Australia Taxation Homework Help
- Supply chain management homework help
- Taxation homework help
- USA taxation assignment help
- Advanced accounting homework help online
- Auditing homework writing help
- Human resource management homework help
- Nursing homework help online
- Psychology homework help online
- Sociology homework help online
- Ratio analysis homework help online
- Strategic Management Homework Help Online
- Mba operations management homework help
- Human resource management homework help
- Operations management homework help
Required
(a) Calculate and discuss briefly three key ratios for both companies that are relevant to the evaluation of the proposed acquisition.
(b) Calculate a range of possible values that Margate Group plc could place on Hastings plc, using both P/E basis and the dividend growth model.
Accompany your calculations by brief comments or explanations. Where necessary, explain any assumptions you have made
(c) Assume you are the Financial Manager with Margate Group plc. Write a report to the directors of the group that evaluates the proposed acquisition.
You should use the figures you have calculated in answer to parts (a) and (b) to support your recommendations/advice where relevant. If you have not been able to do the calculations for parts
(a) and (b), you should make, and state, appropriate assumptions.
Your report should include the following topics.
(i) Recommendation to the directors of a bid price and offer terms, assuming a share-for-share exchange.
(ii) Advice on a strategy for making the offer to Hastings plc to minimise the likelihood of outright rejection by the Hastings plc board, and a discussion of the other risks involved in making the bid.
(iii) Discussion of the strategic and financial advantages that might arise from the acquisition by Margate Group plc of Hastings plc.
Support your discussion with calculations of the post-acquisition value of the combined group and how the estimated gains are likely to be split between the shareholders of Margate Group plc and Hastings plc.
Product Code: ACC526
Looking for Financial Accounting Evaluation Of Proposed Acquisition Homework Help, please submit your details here with product code mentioned above.