Proration


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Proration

Refers to the division between cash and stock in a takeover offer. Often a takeover is a combination of cash and the acquiring firm's equity. Shareholders can elect to take cash or equity. After the election is made, the stock is prorated. For example, if the takeover offer was 500 million in cash and 500 million in shares, if everybody elected cash, then the maximum cash for each shareholder is 50%. If 75% elected to receive cash, 25% of the shareholders would get 100% equity and the other 75% would get 75% cash and 25% equity. The proportions are complicated to compute if the new shares are worth more than the old shares. In this case, small shareholders (with say 100 shares) might receive 100% cash because it is disadvantageous to have a lot less than 100 shares.

Pro Rata

Describing a distribution according to some proportion. For example, a salary may be stated as $120,000 per year pro rata. This means that if an employee only works for six months, his/her salary will be $60,000. Likewise, dividends are distributed pro rata, meaning that shareholders receive them according to the proportion of shares that they own.
References in periodicals archive ?
Others argue opting for the proration route is just kicking a $7.
The number of shares to be purchased, the price per share and the proration factor are preliminary.
This is because the income or loss for the year of change is allocated by proration on a daily basis.
The repurchases will be made at an estimated proration factor of 67.
A; NYSE: GIB) announces that it has established the proration of payment in cash and shares pursuant to its offer dated December 6, 2002, as amended, (the "Offer") to acquire all of the outstanding common shares of Cognicase Inc.
Savient has been informed by American Stock Transfer and Trust Company, the depositary for the tender offer, that the final proration factor for the tender offer was 79.
Security Capital expects the proration to be approximately 78% of those shares tendered at or below the purchase price.
Acxiom has also been informed by the depositary that the updated preliminary proration factor for the shares tendered at $25.
The parties electing to receive either common or preferred stock, therefore, may be subject to a proration of shares.
Acxiom(R) Corporation (Nasdaq: ACXM) today provided preliminary proration information with respect to its previously announced preliminary results of its modified "Dutch Auction" self-tender offer, which expired at 5:00 p.
00 per share price, thus resulting in a proration factor of approximately 57%.
Savient has been informed by American Stock Transfer & Trust Company, which is the depositary for the tender offer, that the preliminary proration factor for the tender offer is approximately 79%.