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 ?
If, by way of contrast, there is complete proration of papers, then these authors will choose not to coauthor because the prorated value of the six coauthored lines is three, which is less than the four lines they will get credit for if they do not coauthor.
Wendy Davis, D-Fort Worth, the burden of proration would fall on districts with lower property wealth - though lawmakers could conceivably tweak the law to address that and the target revenue issue in a budget conference committee or with an amendment to a fiscal matters bill.
This is because the income or loss for the year of change is allocated by proration on a daily basis.
CBS expects to announce the final proration factor promptly following the expiration of the guaranteed delivery period, which is expected to occur on July 14, 2014.
4 November 2013 - US regulated exchanges and clearing houses operator IntercontinentalExchange Inc (NYSE:ICE), or ICE, and takeover target NYSE Euronext (NYSE:NYX) said that according to preliminary results of proration calculations, NYSE shareholders who had chosen to get ICE stock only would receive 0.
The number of shares tendered and not withdrawn and the proration factor are preliminary and are subject to verification.
Shares tendered that were subject to proration were 1,674,214,833 and 'Odd-lot' shares tendered that were not subject to proration were 760,163.
Based on the estimated proration factor, after consummation of the transactions contemplated in the Offer to Purchase relating to the offer, Stins Coman is expected to beneficially own approximately 41.
This preliminary proration factor is subject to change based on the number of tendered shares that satisfy the guaranteed delivery procedures, as well as the number of 'odd-lot' shares that were validly tendered and not subject to proration, Pfizer said.
The preliminary results indicate that the offer is oversubscribed, and accordingly, a proration factor will be applied.
M2 EQUITYBITES-October 11, 2012--Park Sterling reports final proration results of merger(C)2012 M2 COMMUNICATIONS http://www.
Of the shares to be purchased, 300,000 represent shares selected as a result of the proration process and the 1,080 additional shares represent shares that would otherwise constitute new "odd lots" after the proration process and will thus be purchased by the Company.