An Exchange Ratio Determination Model for Demergers

Mohanty, Pitabas and Jain, Dilip (2000) An Exchange Ratio Determination Model for Demergers. TAPMI, Manipal.


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Companies in India are increasingly adopting the route of demerger to get more focussed, thereby creating shareholders of either the transferring company or the transferred company, lose because of the improper determination of the exchange ratio. No model exists in the Finance literature that can help the companies in arriving at an exchange ratio in the case of demerger', In this paper we have proposed a model that can be used both to determine the swap ratio and to find the impact of the demerger on the shareholders' wealth. Subsequently, we have applied the model to the famous Grasim-Indian Rayon demerger' case, We found that the shareholders of both the companies gained handsomelv from the merger.

Item Type: TAPMI Working Papers
Uncontrolled Keywords: Finance; Exchange Ratio Determination Model
Subjects: Finance
Divisions: Finance and Strategy
Depositing User: Ms. Vanitha K
Date Deposited: 17 Nov 2018 09:12
Last Modified: 24 Nov 2018 11:27

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