Consider following statements with respect to Swap Ratio It is the ratio at which an acquiring compa...........

Economic Affairs Types of Banks and Banking

Consider following statements with respect to Swap Ratio

It is the ratio at which an acquiring company will offer its own shares in exchange for the target company’s shares during a merger or acquisition.
To calculate the swap ratio, companies analyze only financial ratios such as book value, earnings per share, profits after tax, and dividends paid.

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The Union Cabinet on Wednesday had okayed the amalgamation of 10 public sector banks to create four large state-owned lenders with effect from April 1, 2020.
According to the mega consolidation plan, OBC and UBI will merge into PNB; Syndicate Bank into Canara Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank into Indian Bank.After the mergers, there will be seven large public sector banks (PSBs) and five smaller ones.
Swap ratio is the ratio at which an acquiring company will offer its own shares in exchange for the target company’s shares during a merger or acquisition.To calculate the swap ratio, companies analyze financial ratios such as book value, earnings per share, profits after tax, and dividends paid, as well as other factors, such as the reasons for the merger or acquisition. The current market prices of the target and acquiring company’s stock are compared along with their respective financial situations.

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