Calculate the fixed exchange ratio based on the following transaction details.

Transaction Details:
AcquirerCo agrees to purchase TargetCo in an all-stock transaction valued at $2.0 billion.TargetCo's shareholders will receive one share of AcquirerCo's stock for every four shares of TargetCo stock they own.

Question

Quizplus · Accepted Answer

The fixed exchange ratio is determined by the number of shares of AcquirerCo's stock that TargetCo's shareholders receive for each of their shares. Since they receive one share of AcquirerCo for every four shares of TargetCo, the fixed exchange ratio is 1/4 = 0.25.

Calculate the Fixed Exchange Ratio Based on the Following Transaction