Merger / Acquisition – Mechanics of Share-for-Share Exchange

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December 8, 2020 at 1:03 pm #598405
siwela1
Participant
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Case 1:Predator MERGES with Target using a share-for-share exchange.
What happens to Target’s shares after they are bought by the predator?
– Are they dissolved and no longer exist?
– Do they become “predator” shares, i.e. does predator’s shareholding increase by target’s shares bought, and reduce by predator shares passed to target?
Case 2:Predator TAKES OVER Target using a share-for-share exchange.
Same queries as above.
December 8, 2020 at 3:55 pm #598435
John Moffat
Keymaster
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The answer is the same in both cases. After the takeover the shares in the target company are cancelled and no longer exist. The original shareholders in the target company will receive either cash or shares in the acquiring company (or a combination of the two).
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