It is the fixed number of the acquirer's shares you receive for each share you own. Because the number of shares is fixed but their price is not, the value of the deal moves with the acquirer's share price.
In a cash deal you are told a price per share. Once the deal looks certain, the target's shares tend to sit near that price and stop moving much — there is little left to find out.
In a stock deal you are paid in the buyer's shares. The ratio is fixed in the agreement; the value of those shares is not.
If the ratio is 0.15, each share you own becomes 0.15 shares of the acquirer when the deal closes. Multiply the acquirer's share price by the ratio and you have what the deal is currently worth per share.
That figure changes every time the acquirer's price changes — which is why a target in a stock deal keeps moving even after the terms are agreed.
From the moment terms are fixed, holding the target is close to holding the acquirer. If the acquirer's shares fall, the value of what you are owed falls with them, even though the deal itself has not changed.
This surprises people who expect an agreed deal to make a holding stable. Being tied to something is not the same as being still.
Signing is not closing. A deal typically needs shareholder approval and clearance from competition regulators, and cross-border deals may need several.
Shareholder votes are usually a formality by the time they are scheduled. Regulatory clearance is the step that carries real uncertainty.
One question, no account: what did you come here for, and did you find it? A person reads these, and they shape what gets written next.
From StockMotive — the honest why behind every market move. Educational information only, not investment advice.