Abstract
The Merger of CHIPBOND and IST Ltd. was valued on April 01, 2010. CHIPBOND is existing company and IST Ltd. is extinguished company. Both buyer and seller decided to pay this trade-offs in stocks and the stocks exchange ratio is IST 1.8 units stock vs. CHIPBOND 1 unit stock. This trade-offs in stocks alternatively derived from the following considerations, including stocks pricing risk and capital raising concerns. In stocks exchange, the major shareholders of IST Ltd will keep the new company’s stocks. This means they intend to join the new company’s development and growth. This merger case is benevolence and had a mutual acceptable result. It can be a good sample of Taiwan Assembly and Testing industry future development between competition and cooperation. This topic is approached in the method of case study. The aim of this study is to disclose the price decision of merger. Some tools of valuation are used in the study so as to find a reasonable model of price decision for this merger case. Due to merger in stocks, this study is processed by calculating of buyer to seller ratio of market value. This ratio calculation is applied in each valuation tools, which include market appraisal approach, equity appraisal approach, P/B ratio approach, P/S ratio approach and DCF approach. The result of ratio calculation shows that equity appraisal is most close to the merger exchange ratio. Market appraisal、P/B ratio 、P/S ratio and DCF is over the merger exchange ratio. DCF is the highest of over the merger exchange ratio. By watching the stocks market after merger, both companies’ stocks prices went upward, which meant the investors gave the merger a positive view of forward looking. The merger integrated effect is expected to perform in the new company’s operation management, sales volume and revenue. These topics are with respect to the further research sincerely.