Mixed acquisition offer
A mixed offer pays target shareholders using more than one form of consideration, commonly cash plus acquiring-company shares. Its value depends on the cash amount, exchange ratio, the share-price basis and any conditions or alternatives. Target holders retain exposure to the combined business through the shares received, while the bidder must assess financing, dilution and transaction costs. Estimate total value consistently and distinguish the offer price from any synergy or premium that it incorporates.
Worked example
An offer provides $2 cash plus 0.5 bidder shares for each target share. At an illustrative bidder price of $8, headline consideration is $6 per target share. Its eventual value changes if the bidder's share price changes before settlement or if terms specify a different pricing basis.
Common mistake
Valuing the share component as fixed cash or adding the takeover premium to an offer price that already includes it.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AFM | Direct | September 2026–June 2027 |
