1. Doubler Inc June 07 Mark Fielding-Pritchard mefielding.com1

2. Part A  Doubler EPS 4.41/40= 11.03  P/E 290/11.03= 26.3  Fader EPS 2.87/30= 14.7  P/E 180/14.7= 12.2 mefielding.com2

3. Part B Profit after tax Doubler4.41 Fader2.87 Operating Costs0.75 8.03 mefielding.com3 Ignore redundancy costs, one off Number of shares In existence 40 New issue 20, total new shares, 60 New Eps 8.03/60= 13.4c Important to show that EPS has increased -To show synergy -To increase market price --Probable that P/E will increase as well, larger company, less risky, economies of scale etc

4. Part C & D P/E  Group 13.4 x 26.3 = $352m  This assumes  - cash savings are made  -P/e remains constant. There is no reason to assume that an average P/E will be taken (however old examiner did this)  Cash savings may not be made in the short term  The market will react to the news and the price will move according to market sentiment Cash flow  (750k/0.12)- 1m= $5250  Value of company will increase  Assumes cash savings are made and market knows about it (perfect markets)  Assumes cost of capital doesn’t change (so no average)  As with P/E assumes tat nothing ese happens ie reactions from customers or suppliers  If either company is quoted it ignores the cash cost of the compulsory cash offer mefielding.com4

5. Part E Hostile  Quicker  Easier to achieve  Better probability of success Organic  Longer lasting  Easier to manage in the long term  Less public so less expectation  Easier to reverse or change tactics mefielding.com5

6. Part F  Compulsory offers (not US)  Information releases, announcements, offer documents  Time limits  Compulsory sales  Act in shareholders interests  Independ advisors for information valuers, cash flow assumptions etc mefielding.com6