Work out share swap ratio instantly with clear inputs, formula shown and shareable results.
The swap ratio is the agreed value per target share divided by the acquirer's share price: how many acquirer shares each target share receives. Multiplying by target shares gives the issuance, and that determines what proportion of the combined company the target's shareholders end up owning.
Swap ratio
Ratio = Target value per share / Acquirer share price
Shares issued
Shares issued = Ratio x Target shares outstanding
A fixed ratio leaves the target exposed to the acquirer's share price until closing; a fixed value shifts that risk to the acquirer. Collars split the difference.
It depends on the relative multiples. Issuing shares at a higher multiple than the target's earnings multiple is accretive; the reverse is dilutive.