A Study of Merger Exchange Ratio of Financial Holding Companies in Taiwan

• Main Authors: Chun-Lan Chen, 陳春蘭
• Other Authors: 李榮鎮
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/83509814664180317498

碩士 === 長榮大學 === 經營管理研究所 === 94 === This thesis uses two approaches to evaluate financial firms and determines an appropriate stock exchange ratio for Taiwan’s financial holding companies. The exchange ratio is of crucial significance in assessing the desirability of a business combination. The Free Cash Flow to Equity-Average Market Price (FCFE-AMP) and Larson-Gonedes models are employed in this study to determine the exchange ratio which will be acceptable to both financial holding companies and their potential financial subsidiaries, thereby specifying a bargaining range. Thus, the purpose of this thesis is to develop an alternative that may be used to examine the exchange ratios which will be reasonable to both financial holding companies and their target financial subsidiaries. Three financial holding company merger cases are analyzed in this study. By the shareholder wealth constraints formulated by Larson-Gonedes and the FCFE-AMP model, two out of these three merger cases’ actual exchange ratios are bounded by the bargaining range, in which the shareholders of both firms gain from the merger.