Study On The Determination Of Exchange Ratio Of Stock-for-Stock Merger

Stock-for-Stock merger as an important way of merger was widely usedin various types of merger cases. In this regard, the domestic practice israther late, but it was gradually concerned by listed companies, andStock-for-Stock merger has become an important way for the integration ofresources. It is very complex and involving the interests of all parties. Thekey problem is the distribution of interests between large shareholders andminority shareholders. Exchange ratio is directly related to the success of themerger and the interests of minority shareholders, it is worthy of our in-depthstudy.The case that friendship co., combine bailian co., is representative, thiscase is a typical success story of the merger in full circulation background,analysis of this case has important practical significance. This paper used the case study method, combined with domestic andforeign convertible theory research, introduced the background andmotivation of the case, analysised the characteristics of the merger plan.Bycalculation and analysis, following results were obtained:1) This case used the market price as the exchange ratio, It is veryconnected to a reasonable median value1:0.8457, that is air and reasonable,protect the interests of minority shareholders of both. This is an importantfactor for success, and also verifies the validity of the market price.2) Largest shareholder by injecting quality assets to thickening of the netincome per share is another determinant of the success.3) This case provided the appraisal right of dissents for the dissentingshareholders, to give a fair exit mechanism of minority shareholders,emphasized the protection of the interests of minority shareholders throughthe mechanism.Comprehensive calculation and analysis of the results of this case, weget following conclusions:1）Due to the market-oriented reforms and the full circulation of stocks,Using the market prices to determine the exchange ratio has been feasible. This method is more reliable, more simple and intuitive, so that it is easier tobe understood and accepted.2) To protect the interests of minority shareholders protection is socialresponsibility of publicly listed company. This case demonstrates the fact thatproviding reasonable protection mechanism, and protecting the interests ofminority shareholders is a key of successful merger.