EV and MV for a company listed on two stock exchanges?

CFA General
#1

Need help with these concepts for interviews:

Suppose a company is listed on LSE as well as NYSE. How do we calculate its enterprise value and market value?

Also, if a company has a certain class of shares that do not trade and are held by insiders, how do we incorporate them into the enterprise value? Are they taken into accounted when we calculate EPS?

#2

I would use the exchange where there is more liquidity (volume) to calculate the market value.

Illiquid shares are still included in the market cap and EPS calculation since you would need to pay for those shares if you bought the entire company.

#3

Thanks. So would you multiply the same market price with the number of illiquid shares in order to include them in the market cap?

#4

Yes. You cannot really include a discount for marketability on the illiquid shares since you are valuing the entire company as it you could buy it today. Now, if you are trying to assign a value to the illiquid shares that is another matter. In that case you could assign a discount for lack of marketability. If you are looking at buying the entire company that does not apply.

#5

Would it not be at a premium for the relatively higher voting rights that it’d carry with it? (considering the class is for insiders)

#6

Also, what would be the market cap of Unilever? It seems convoluted with Unilever plc and Unilever NV.

#7

If you are buying the whole company the voting rights don’t matter. If you are only buying shares with special voting rights then there may be a premium. I’m not familiar with Unilever’s corporate structure.