A takeover occurs when a company issues new shares in return for the contribution of securities from a third company.
In order to reflect the contribution of shares from a third party company, a subscription transaction must be entered.
📚 How to set up the details of a transaction ?
Determine the subscription price :
For example, let's say that company A is absorbed by company B.
In order to determine the subscription price, the legal documentation must be searched for :
- the valuation of company A
- the exchange ratio between company A and company B (one share in company A = X shares in company B)
In order to determine the unit price per share of the subscription operation, the calculation to be made is as follows :
= exchange ratio x (valuation company A / number of shares company A)
💡 It should be noted that, in the same way that a capital increase may give rise to an issue premium (corresponding to the difference between the real value of a share and its nominal value), a " merger premium " (corresponding to the difference between the contribution value of the assets received as part of the merger and the amount of the increase in the capital of the absorbing company) may also apply.