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Merger Acquistion And Restructuring Numerical
If Company A has a P/E ratio of 20 and EPS of ₹15, what is the market price per share?
Market price = P/E × EPS = 20 × ₹15 = ₹300 per share. This P/E method is widely used to value acquirer and target companies in merger negotiations.
If a target company has EPS of ₹10 and the acquirer offers an exchange ratio of 1.5, what is the effective price per share offered?
Effective price equals exchange ratio multiplied by acquirer share price.
How is the Exchange Ratio calculated in a stock-for-stock merger?
Exchange Ratio = Offer Price per Target Share / Acquirer's Market Price per Share. For example, if Target share is offered at ₹200 and Acquirer trades at ₹400, the exchange ratio is 0.5 shares of acquirer per target share.
What is the formula for calculating the merger premium percentage?
Merger premium % = (Offer price – Market price) / Market price × 100.
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