Part (a) of question three required candidates to calculate the percentage gain on a target company’s share price using three different acquisition methods and to comment on the results. With the cash offer, a significant number of candidates failed to calculate the earnings per share of the acquiring or target companies correctly.

With the share-for-share offer many responses did not account for the synergies created. The majority of candidates were not able to calculate the value of the bond offer. A small minority of the candidates did not give the gains as percentages, but as amounts, although percentages were specifically asked for.

It was surprising that many candidates failed to get many marks for this question especially when a similar question had been set in a recent P4 examination. It could be that candidates did not expect the same topic to be examined again so soon and decided not to study this area.

Candidates should bear in mind that any topic area from the entire P4 syllabus can be tested in an examination. Recent examination of a topic area does not preclude it from being tested again soon after.