YaSheng Group (HERB)

[RealDutch]

For the fun of it, I'm going to calculate for you what HERB stock should be trading at, in a perfect world, if the merger goes thru. And I will need only 2 assumptions.

1) The merger will be based on book value, pro rata
2) The market cap of Gansu Yasheng will increase by the same ratio (again, in a perfect world).

http://www.bloomberg.com/quote/600108:CH
Book (Gansu Yasheng) = Market cap / P/B = 22,058,550,000 / 4.9065 = CNY 4,495,000,000 = $723M

http://www.sec.gov/Archives/edgar/data/1123312/000119983515000079/yasheng_10k-16333.htm
Book (HERB) = $2,421M

Market Cap (old) = CNY 22,058,550,000 = $3,549M

Market Cap (new) = $3,549M * ((723 + 2,421)/723) = $15,433M

HERB shareholders own 2,421/(2,421 + 723) or 77% = $11,883M

Divided by 155,097,355 shares = $76.6 per share.

That's what you get when markets are completely out of whack.