Size of Transaction in Stock-for-Stock Transactions

This tip sheet provides guidance for a hypothetical transaction where Company A is acquiring the voting shares of Company B and the shareholders of B receive the voting shares of A as consideration.  The size of transaction for HSR purposes depends on various factors, including whether there is a fixed ratio exchange (where the acquisition price can be determined) or if the companies involved are publicly traded.  Fair market value (FMV) is determined in accordance with 16 CFR Section 801.10(c)(3). Market price is defined in 16 CFR Section 801.10(c)(1).

For a fixed ratio exchange, the size of transaction is:

  A is publicly traded, B is not B is publicly traded, A is not A and B are publicly traded Neither A nor B is publicly traded
A’s acquisition of B stock in 45 days or less: Market price of A stock Market price of B stock the greater of:  the market price of A stock or the market price of B stock FMV of B stock
A’s acquisition of B stock after 45 days: FMV of B stock FMV of B stock FMV of B stock FMV of B stock
B shareholder’s acquisition of A stock in 45 days or less: Market price of A stock FMV of A stock Market price of A stock FMV of A stock
B shareholder’s acquisition of A stock after 45 days: FMV of A stock FMV of A stock FMV of A stock FMV of A stock

If there is no fixed ratio exchange, the size of transaction is:

  A is publicly traded, B is not B is publicly traded, A is not A and B are publicly traded Neither A nor B is publicly traded
A’s acquisition of B stock in 45 days or less: FMV of B stock Market price of B stock Market price of B stock FMV of B stock
A’s acquisition of B stock after 45 days: FMV of B stock FMV of B stock FMV of B stock FMV of B stock
B shareholder’s acquisition of A stock in 45 days or less:* Market price of A stock FMV of A stock Market price of A stock FMV of A stock
B shareholder’s acquisition of A stock after 45 days:* FMV of A stock FMV of A stock FMV of A stock FMV of A stock

* B shareholders must estimate the number of A shares they will receive.