{"title":"Determination of Swap Ratio in Merger: Case of Reliance Natural Resources Ltd. and Reliance Power Ltd. Merger","authors":"Ravi Agarwal, Vignesh Ramakrishnan","doi":"10.2139/ssrn.1651451","DOIUrl":null,"url":null,"abstract":"In July 2010, the management of Reliance Power Ltd and Reliance Natural Resources Ltd. announced merger of the two companies and the share exchange ratio was later set at 1:4. Much has been talked and written in financial press on the validity of this swap ratio. In the present study, we have applied three different approaches - discounted cash flow approach, market value approach and Conn and Nielsen model - to calculate share swap ratio between the two companies. Our analysis shows that the swap ratio fixed the management has been justified.","PeriodicalId":170425,"journal":{"name":"ERN: Vertical & Horizontal Integration (Topic)","volume":"37 1","pages":"0"},"PeriodicalIF":0.0000,"publicationDate":"2010-07-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"ERN: Vertical & Horizontal Integration (Topic)","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.2139/ssrn.1651451","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
引用次数: 1
Abstract
In July 2010, the management of Reliance Power Ltd and Reliance Natural Resources Ltd. announced merger of the two companies and the share exchange ratio was later set at 1:4. Much has been talked and written in financial press on the validity of this swap ratio. In the present study, we have applied three different approaches - discounted cash flow approach, market value approach and Conn and Nielsen model - to calculate share swap ratio between the two companies. Our analysis shows that the swap ratio fixed the management has been justified.
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