F3 Exam Dumps : Financial Strategy

Current value of Z = 590m.

Price for targets: A 25m, B 62m, C 67m, D 60m.

Synergy (or value added) = Combined value – (Z value + Target price):

A: 620 – (590 + 25) = 5m

B: 655 – (590 + 62) = 3m

C: 666 – (590 + 67) = 9m

D: 652 – (590 + 60) = 2m

Largest gain is with C.

A P/E valuation should use forecast sustainable earnings, not just the last year’s profit. ✅ (C)

The “E” in P/E is earnings after interest and tax, not profit before interest and tax. ✅ (D)

The P/E multiple should be based on comparable companies in the same sector, not the whole market. ✅ (E)

Statement A is wrong (unlisted companies usually get a discount, not an uplift).

Statement B is wrong (P/E gives an equity value, not whole entity value).

Answer Q34: C, D, E

Under typical takeover regulation and CIMA F3 principles, the following are legitimate post-offer defences:

A. Independent professional revaluation of assets

This is legitimate: providing better information to shareholders to show that the bid undervalues the company.

C. Make a counter-bid for Company A (a “Pac-Man defence”)

This is acceptable if it can be justified as enhancing shareholder wealth.

E. Refer the bid to competition authorities

It is a legitimate defence to challenge the bid on competition/antitrust grounds if it may reduce competition.

In contrast:

B (altering the articles to change acceptance thresholds mid-bid) is a classic frustrating action, usually not allowed without shareholder approval during an offer period.

D (publishing knowingly unrealistic optimistic forecasts) is misleading and not permitted under market and takeover rules.