Brief Definition
A stock deal, in finance, refers to a transaction in which one company acquires another by exchanging its own stock for the stock of the target company.
Further Explanation
A stock deal, in finance, refers to a transaction in which one company acquires another by exchanging its own stock for the stock of the target company. Instead of paying cash, the acquiring company offers its shares to the shareholders of the company being acquired. This type of deal can be advantageous because it doesn’t require the acquiring company to use cash reserves or take on additional debt.
Example:
Company A wants to acquire Company B. Instead of paying $1 billion in cash, Company A offers its own shares to Company B’s shareholders. If Company A’s stock is valued at $100 per share, it might offer 10 million of its shares to Company B’s shareholders in exchange for all the shares of Company B. After the deal, the shareholders of Company B become shareholders of Company A.