An Exchange Ratio Determination Model For Airline Mergers:Taiwan's Case Simulative Studies

by Yu, Chung-Hsun

Abstract (Summary)
Abstract In stock-exchanged airline mergers, the determination of an exchange ratio is an important issue. The purpose of this paper is providing a simulative study of exchange ratio determination for airline merger in Taiwan. The paper is based on the Larson-Gonedes merger exchange ratio model(1969) and extends it to consider marker risk. In addition, we use the exponential smoothing model to estimate the expected post-merger price-earnings ratio. Our sample consists of China Airlines and EVA Airways. We find that the L-G model indicates the interval of exchange ratios which will enhance, or at last not cause any diminution in the wealth positions of all parties to a proposed airline merger. Also, the bargaining area offers some information to help merger candidates to negotiate final actual exchange ratio.
Bibliographical Information:

Advisor:none; none; Chau-Jung Kuo

School:National Sun Yat-Sen University

School Location:China - Taiwan

Source Type:Master's Thesis

Keywords:exchange ratio share for airline mergers


Date of Publication:07/18/2002

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