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What happens to shares outstanding figure after takeover?

Discussion in 'Beginner's Lounge' started by Seneca60BC, Mar 4, 2007.

  1. Seneca60BC

    Seneca60BC

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    Hi

    I have a question relating to the number of shares outstanding after a takeover. To keep things simple, lets forget about options for now.

    Company A has 1 million shares currently outstanding. Company A wants to takeover company B which currently has 500 000 shares outstanding.

    Company A also offers Company B 0.5 shares of Company's A share for every 1 share in Company B.

    So are my calculations correct?

    Company A Company B Company New Shares
    1,000,000 + 500,000 + (0.5 x 500,000)

    = 1,750,000 now outstanding (after takeover is complete)

    Is this correct?

    Thanks
     
  2. kaveman

    kaveman

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    If they are only offering 1 share of A for 2 of B then A will only need to create 250,000 new shares (half of B's 500,000)
    so new total shares is 1,250,000
     
  3. Seneca60BC

    Seneca60BC

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    OK thanks Graham!
     
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