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
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Need to correct "Whether it is last installment " response in Form 26 QB
- " Income from House Property " in joint names of co-owners
- REGARDING TDS RETURN OF FORM 27Q
- Notice under e-Verification Scheme
- GST demand notice for ITC reversal against exempted supply.
- RCM ON SECURITY CHARGES FROM INDIVIDUALS
- How to get money back from delisted company
- ITC not to be taken in accounts & GSTR-3B
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
