cashout (noun, cash-out, \ kæʃaʊt \) merger (noun, merg-er, \ ˈmɜːrdʒər \)
Definition: a merger during which a company acquires another organization’s stock with cash, thus avoiding the more common tactic of trading it with its own stock. By performing a cashout merger, the acquiring firm decreases its capital but instead obtains the assets of the bought out firm. The primary reason why such an exchange takes place is that the shareholders of the company that’s being merged don’t want to be identified with the organization resulting from the merging process. Such mergers oftentimes are accompanied by freeze-out mergers, when a company gains minority shares by purchasing them with cash.
In a Sentence:
- During the last meeting, Prime Lock proposed a cashout merger to the remaining KAO stakeholders at $40 per share.
- Just as it seemed that the negotiations reached an impasse, the president of the acquiring company proposed a ridiculously generous cashout merger.
- MintFresh’s shareholders accepted a cashout merger at a share price that was substantially lower than the initial value of their assets as they were afraid that otherwise they’d be left with nothing at all.
Synonyms and related words: stockholder, de facto merger, short-form merger, cleanup merger, reverse merger
