Study On The Determination Of Exchane Ritio Of Stock-for-stock Merger

Since the early years of the 21 st century, along with the process of global economic integration, companies from all over the world are in the pursuit of the expansion, as a measure of concentration of capital and resources. Mergers and acquisitions have been widely used in each big enterprise, and meet its fifth wave of development. Whether from the scale or the way of mergers and acquisitions, it increasingly presents a plural characteristic, but mainly by powerful alliances, that is, the stock offer, also be called the convertible merger. Compared to the cash merger, convertible merger can effectively release the pressure of paying large amounts of cash, and avoid debt from the expansion. Therefore, this low-cost expansion in recent years has gradually been favored by the enterprises in our nation. Besides, under the background of promoting the economic system reform and the integration of industry, it is not uncommon to see that the convertible merger being widely used in the capital market. At this point in time, researches on convertible merger go with the stream, and it has the certain practical significance.The paper adopts the case study method, and selects an innovative case, that is Shenyin Wanguo Sec. absorption merged Hongyuan Securities. This paper analyzes the reason and the background with the convertible merger, and also evaluates the exchange ratio. This is a typical successful case under the background of “One equity participation, one controlling interest”. Through the analysis and calculation, we found that it is a win-win co-operation and could have synergy by the merger. The practical exchange ratio is within the proper range based on the theory, therefore the exchange ratio is fair and reasonable. Besides, to ensure the merger could complete successfully, the companies have strengthened the protection of the minority stock holders. They provide cash-option for dissent shareholders from both sides. Such consideration is a critical element in the merger and acquisitions.