SFM Practice manual-Mergers & Acquisitions-Doubt

Beta of firm = Beta of equity * Equity/((E+D(1-t)) + Beta of debt * Debt(1-t)/((E+D(1-t))

You ar egiven Beta of equity and beta of debt --> you will get firm beta

Industry beta is same for both the company Beta of proxy firm = beta of ABC

By reverse computation and changing debt equity ratio you can get equity beta for ABC

since KLM is under ABC's management hence same debt equity ration of ABC will be used for KLM