Pl. help me on Mergers and acquisition Of MAFA
This query is : Resolved
CA supriyo saha
(Querist)
06 March 2008
Suppose EPS of A and B are Rs 2 and Rs 3 respectively. A wants to acquire B. Swap ratio-.5:1(1 sh of A for every 2 sh of B)
So wht. will be the equivalent EPS of B after merger. sh.cap. of A and B is 20000 and 30000 respectively.
I have solved in the foll. way.
shareholder of B earns rs3 for 1 share
so they will be earning Rs 6 for 2 shares.
therefore their equivalent EPS will be 6 in the post-merger .
One book has solved this in the foll. way.
Earings of A-40000 and B-90000
shares issued by A-15000.
total no. of shares of merged entity-35000
EPS of merged entity-130000/35000=3.7143
So equivalent EPS of B-3.7143X.5=1.8572
Now pl. tell me which approach is correct.
So wht. will be the equivalent EPS of B after merger. sh.cap. of A and B is 20000 and 30000 respectively.
I have solved in the foll. way.
shareholder of B earns rs3 for 1 share
so they will be earning Rs 6 for 2 shares.
therefore their equivalent EPS will be 6 in the post-merger .
One book has solved this in the foll. way.
Earings of A-40000 and B-90000
shares issued by A-15000.
total no. of shares of merged entity-35000
EPS of merged entity-130000/35000=3.7143
So equivalent EPS of B-3.7143X.5=1.8572
Now pl. tell me which approach is correct.
S.Srinivasaraghavan
(Expert)
06 March 2008
After merger there will be only one company, so where is the question of two EPS?
07 March 2008
THE SOLUTION OF BOOK IS CORRECT
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- EPF ECR NEW FILE SEP 17TH 2026
- Gst registered proprietorship firm
- SALARY CAN BE CAPITALIZE
- TAX AUDIT ON PROFESSIONAL INCOME
- Non filing of I T Returns
- TDS on purchase of under construction property from a reseller
- GST Intimation due to Government took possession of Business Premises under PPE Act
- Capitalgain tax purposes for valuation report compulsory
- TDS on Fixed Assets purchased
- SECTION 393(3) TAX ON CASH WITHDRAWAL
- Under marginal scheme
- Import of Software Service.
- Clarification Requested: Gift → NRO → NRE → Overseas Transfer - USA/CANDA (FEMA & Tax Compliance)
- GST on Renting godown to KFCSC for Storage of Raagi
- How to Handle Active E-Invoices in GST Portal Deleted from Tally?
- IMPORT PURCHASE ENTRY PASSED IN BOOKS OF ACCOUNT
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Goods sold but invoice not issued
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
