What is stock exchange merger and acquisition?

M&A means that the acquiring company converts the shares of the target company into the shares of the company according to a certain proportion, and the target company terminates or becomes a subsidiary of the acquiring company.

According to the specific way, there are three situations:

1, capital increase and share exchange. The acquisition company replaces the original shares of the target company by issuing new shares, including common shares or convertible preferred shares, so as to achieve the acquisition purpose.

2. Stock exchange. In the United States, the law allows the acquiring company to replace the stock of the target company with its own stock.

3. The cross-share exchange between the parent company and its subsidiaries is manifested in the triangular relationship between the acquiring company itself, the parent company and the target company. Usually, after the stock exchange, the target company either dies, becomes a subsidiary of the acquiring company or becomes a subsidiary of the parent company.