M&A Exchange Ratio Discussion－The Passive Component Industry

• Main Authors: Ya-Hui Hsu, 許雅惠
• Other Authors: Chau-jung Kuo
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/39779436932895780467

碩士 === 國立中山大學 === 財務管理學系研究所 === 94 === Since the accelerating development of globalization and market opening, the competitive advantages in this economic environment are innovation, information and market access. Passive component industry usually takes price cost-down strategy to keep the advantage to adapt this formidable pressure from the vicious competition in the market, and the fastest way to implement this strategy is merger & acquisition, then a tendency is formed at this kind of economic situation. This paper focused on 2 M&A models which composed of 4 passive component companies, Yageo, Compostar, Walsin and Pan Overseas. It based on the model analysis for the related issues regarding the common stock exchange ratio in their M&A process. Our study and observation models adopted from the L-G model brought up from Kermit D. Larson and Nicholas J.Gonedes. Furthermore, we take systematic risk indicator(β) to adjust the marginal condition derived from the highest and lowest exchange ratio of L-G model, then we analyzed by comparing with the actual ratio. With regards to the budget EPS, it was applied to estimate by the reduced form model from Terry A. Marsh and Robert C. Merton. Comparing the estimate result with the actual public M&A information, we found the more information we can use for regression estimation, the much precise estimate results will be. For example, it is close to the results by comparing to the reference estimate digits from Yageo & Walsin models. The decision of actual exchange ratio depends on the bilateral negotiation abilities, and we used L-G model to estimate the reasonable range of exchange ratio. Because of many factors which can not be quantified during the merger negotiation process, the importance of the exchange ratio estimate range from is paper is providing the bottom line for the negotiation, and these key information should be helpful for both parties during the M&A discussion. Recently, M&A process in passive component industry occur frequently, it was said that 2006 is the M&A year for this industry. I wish the empirical result in this paper can provide the reference indication to help the development of passive component industry in the future.