Per IRC § 368(a)(1)(B)

Buyer acquires stock of Target
directly from the Target shareholders
solely in exchange for voting stock of Buyer

• Target shareholders can exchange their Target stock
  only for Buyer voting stock
• Buyer must control Target after the exchange

• Target shareholders need not surrender control in the exchange (as is the case in a reverse triangular merger)
• Thus, creeping acquisitions are possible but raise the possibility that prior purchases of Target stock for cash by Buyer will be integrated under the step transaction doctrine with the stock-for-stock exchange, causing the overall transaction to violate the solely for voting stock requirement

Stock of Parent in control of Buyer can instead be transferred to Target shareholders as consideration for their transfer of Target stock to Buyer

• If other B reorganization requirements are met
• Cannot combine Parent and Buyer voting stock