What happens during M/A when the target shareholders sell more their to the acquirer than they receive from the acquirer? Do some target shareholder not get any shares?
My understanding is the ratio being less than 1 is fine. Say the acquirer needs to acquire 1 million shares in the target company, and say the pre-negotiated exchange ratio is 0.4. This means that the acquirer will need to exchange 400,000 of their own shares in exchange for 1 million of the target company’s shares. So, if you, a shareholder in the target company own 1,000 shares, you will be entitled to 400 shares. Every target shareholder whose shares are to be included in the 1 million shares the acquirer is going to be purchased will receive 0.4 shares in the acquiring company per share they own in the target company, no target shareholder doesn’t get any shares so to speak.
I’m not sure what happens in the event of decimal places, eg, if you own 2 shares, you can’t receive 0.8 shares… but in practice there will probably be a mixed offering, or some other means of addressing that.