Acquisitions with shares | Stocks and bonds | Finance & Capital Markets | Khan

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Mechanics of a share-based acquisition. Created by Sal Khan.

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Finance and capital markets on Khan Academy: Companies often buy or merge with other companies using shares (which is sometimes less intuitive than when they use cash). This tutorial walks through the mechanics of how this happens and details what is likely to happen in the public markets because of the transaction (including opportunities for arbitrage).

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15 thoughts on “Acquisitions with shares | Stocks and bonds | Finance & Capital Markets | Khan”

  1. A little confused, so when company A acquires another company, they just issue some new stock? Isn't this sort of pulling money in the thin air? Theoretically they can acquire whole lots of companies just by issuing new stock and don't have to actually pay anything?

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  4. So, Company B was 100% owned by shareholders and now is 100% owned by Company A, and Company A is now 10/12 owned by shareholders of the previous Company A and 2/12 owned by shareholders of the previous Company B, right?

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