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Terms of bid for Chawon Co
In initial discussions about the acquisition, Chris Chawon indicated that he would prefer the consideration to be a share-for-share exchange, the terms being one Chawon Co share for five Selorne Co shares.Value per share in combined company = $420.8m/(50m + 10m) = $7.01
Question ) they did exchange shares but why did they have more total shares?
What is the share exchange? Selorne issued 10m shares for acquiring Chawon?Please help me ~~~ to understand the fundamental concept of share exchange. Thank you very much.
A share exchange is where the acquiring company issues more shares and gives them to the shareholders of the target company in exchange for their shares in the target company (which are then of course cancelled).
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