All Cash, All Stock Offer

  

Categories: Stocks, Banking

The term "all cash, all stock offer" sounds like a real "have your cake and eat it too" type situation, right? All stock! (Read: no taxes until I sell!) All cash! (Porsche shopping time!) We'll take both!

It should probably read "all cash for stock offer," and in every day Wall Street talk, you'll commonly hear it referred to as just a "cash offer." (See: All-Cash Deal) That is, the buyer is paying all cash for all of the stock of the target.

The underlying point is that one company is offering to buy another by exchanging a set cash amount for each share of outstanding stock. The fact that the bid is still an offer and not yet a done deal indicates that a final agreement has yet to close.

Related or Semi-related Video

Finance: What's the difference between m...23 Views

00:00

Finance allah shmoop what's the difference between mergers and acquisitions

00:08

all right people listen up Merger that's what's about to

00:11

happen here it's a merger acquisition that's what's about to

00:16

happen here Corporate america is kind of same thing when

00:20

two companies merge while they generally you know attracted to

00:24

each other hopefully respect each other they share stock or

00:28

combined the stocks of each side and you know combine

00:32

efforts and then and then cuddle afterwards if they're successful

00:36

at the merger than the combination of two roughly equals

00:39

yields more than the one plus one combo that made

00:43

them so two companies get together on generally equal ish

00:46

footing In that case acquisitions are a combining more like

00:51

that eating thing on much different footing The large company

00:55

eats or buys the target either using its more highly

00:59

valued stock currency or it's taft to do so Well

01:02

why would a company acquire another Well the target might

01:05

have one hundred employees ninety of whom can be fired

01:08

with massive expense savings after the acquisition For the acquirer

01:12

such that economically the acquisition won't just makes a whole

01:15

lot of financial sense acquisitions happen for market power reasons

01:19

As well like imagine the negotiating leverage that amazon would

01:23

have if it bought the next five biggest online retailers

01:27

Or maybe it'll just kill them Probably not legal for

01:29

them to buy him anyway given the monopoly like dominance

01:32

of amazon these days But wow that would be a

01:34

powerful set of acquisitions And that would be a good

01:37

reason for ems on to acquire a whole bunch Things

01:39

and bezos would grow even more powerful maybe too powerful

Up Next

Finance: What is an All or None Order?
71 Views

What is an All or None Limit Order? An all or none limit order says the investor wants their order filled entirely or not at all. An investor may r...

Finance: What is The Difference Between a Horizontal and a Vertical Merger?
6 Views

What is the difference between a Horizontal and a Vertical Merger? Horizontal mergers happen when two companies within the same industry decide to...

Find other enlightening terms in Shmoop Finance Genius Bar(f)