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All questions refer to the proposed acquisition of Samsung C&T by Cheil. You can find information on the deal in the newspaper article http://www.ft.com/cms/s/0/59a40d52-2a0f-11e5-acfb-cbd2e1c81cca.html#axzz3k6o8gcdb and in the excerpt of the merger prospectus attached. In addition, here is some information on selected comparable firms:

EPS P/E market cap (TKRW)
Hyundai E&C 3,599 10.52 4.215
GS E&C -667 N/A 1.953
Daelim Industrial Co Ltd -11,048.28 N/A 3.13
Cheil Industries 1,331.16 115.47 20.75
Samsung C&T 1,651.00 33.7 8.71

Question 1 (40 marks)

How much should Cheil pay for one share of Samsung C&T common stock? Assume that the preferred shares are not shares but debt worth exactly their current value. State your assumptions clearly and discuss how much your answer is sensitive to them. How does your result compare to the proposed merger valuation?

Question 2 (30 Marks)

Why does Samsung C&T and Cheil want to merge? Is the merger a good proposition for the shareholders of the two companies? What are the risks of the transaction?

Question 3 (30 marks)

Consult the largest shareholder of Samsung C&T, the South Korean National Pension fund. Should they vote for the acquisition, or should they agree with Elliott Associates?