Company Alpha ltd has a market value of N$6 billion and an issued share capital of 60 million shares.

Company Alpha ltd has a market value of N$6 billion and an issued share capital of 60 million shares. Company Beta ltd, a company in the same industry as Company Alpha, has an issued share capital of 20 million shares and a market value of N$1 billion. Company Alpha wishes to take over company Beta, and believes that the combined company value will be N$8 billion. Company Beta has agreed to a takeover value of N$1,5 billion.
Required:
Discuss the effect (s) the takeover of company Beta will have on the existing shareholders of company Alpha, if company Beta is acquired by:
a) An issue of new shares to existing shareholders; (7 marks)
b) An issue of shares to new shareholders; (5 marks)
c) Borrowing ; or (5 marks)
d) A share exchange. (8 marks)