Stock swap

From Wikipedia, the free encyclopedia

A stock swap is a business takeover in which the acquiring company uses its own stock to pay for the acquired company. Each shareholder of the newly acquired company receives a certain number of shares of the acquiring company's stock for each share of stock they previously held in the acquired company. Sometimes some shareholders are required to wait for an agreed-upon period of time before they are allowed to sell their new shares of stock.

Alternatively, it is a method of exercising stock options where shares that the holder already owns are used to buy new shares at the exercise price.

It is one of the Poison pill strategies used to avoid a hostile takeover bid by another company.