What does "cash instead" mean in finance?
"Cash instead" is a term used to identify specific types of exchanges that may occur in connection with shares. This particular strategy can be used as part of a process that involves recognizing fractional shares during the transaction, with a certain type of cash payment accompanied by the assignment of entire shares to each investor. This approach can be used in a number of situations, including events such as the company's reorganization, the purchase of one company another, friendly merger or takeover and even happy events of shares.
As it concerns the situation of merger or by purchasing one company, cash may be used as a means of securing investors holding shares in the purchased company to obtain a combination of new owners and possible partial replacement for cash payment. This approach is usually used to compensate the investor for what is called a fractr share or asset that is not completely equal to the wholethe share. For example, if it is determined that as a result of the purchase or merger, the investor is entitled to 200.5 shares of shares in the new company, receives 200 shares of this new shares and will be compensated in cash for this 0.50 share in the level of this half share as a share.
This cash at rest is sometimes also used with shares. If the distribution results in the investors holding fractional shares, the issuer may pay the possibility to purchase these specific parts or shares and pay cash to investors. As in other situations, investors continue to keep the entire stock as long as they want it.
Determination of the amount of remuneration, which is considered to be just in cash in the situation, includes the assessment of the current market value of the shares of the shares. In most cases, the market value of shares from the date of the new shares to the investor will serve as a number to usewhen calculating the value of fractional shares. Upon completion of the calculation, the investor is notified and the payment is offered according to any payment provision currently introduced by the investor. Since the issuer effectively uses cash in the process of purchasing these fraction shares from the investor, the investor continues to maintain the entire stock as long as he wants, but the investor account no longer reflects partial shares.