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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
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SEC_CODE_REF_0090001192884
Transaction
Result
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