Also known as: share exchanges · share-exchange · share-for-share exchange
Written by attorneys · grounded in primary & secondary sources — see below
A statutory mechanism by which one corporation acquires all of the shares of one or more classes or series of shares of another corporation or all eligible interests of another entity. The acquiring corporation provides consideration in the form of its own shares or other securities, rights to acquire shares, cash, other property, or any combination of these. The transaction occurs pursuant to an approved plan of share exchange that identifies the parties and sets forth the terms and manner of exchange.
Sierra Solutions adopts a written plan to acquire every share of Synergy Systems. In return, Synergy shareholders receive Sierra common stock plus cash. After board and shareholder approval of the plan, Sierra issues the stock and pays the cash, and Synergy becomes a wholly owned subsidiary while continuing its separate existence.
Sentinel Security approves a plan under which Sapphire Technologies will acquire all of Sentinel's common shares. Sapphire will deliver its own shares, warrants, and a cash component. Once the plan receives the required approvals, every Sentinel shareholder must surrender shares on the stated terms, and Sapphire becomes Sentinel's sole owner.
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Sebastian Santos, a minority shareholder in a target company, challenges the fairness of the consideration offered in a share exchange with Solomon Silver's acquiring corporation. The court examines whether the exchange ratio and mix of stock and cash adequately reflect the target's value and the benefits flowing to the controlling shareholder.
The acquiring corporation may deliver its own shares or other securities, rights to acquire shares or securities, cash, other property, or any combination of these. The plan must specify the terms and manner of exchange.
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Yes. The board of directors must first adopt the plan of share exchange. The plan is then submitted to shareholders for approval by the requisite vote.
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A foreign corporation or eligible entity may be the acquired entity only if the share exchange is permitted by the organic law of that entity.
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The plan must include the name of each entity, the terms and conditions of the exchange, and the manner and basis of exchanging shares or interests.
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…interest in Mayflower and (2) because of the advantages that would accrue to Hilton as an incident to 100 per cent ownership, "a share-for-share exchange will be fair and reasonable to all concerned." 93 A.2d 110 . By ultimately affirming the Chancellor and thus finding the terms of the merger to be fair to the minority, it can be argued…