proration

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. Bloomberg Financial Dictionary

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prorate UK US /ˌprəʊˈreɪt/ verb [T]
► ACCOUNTING to calculate a cost, payment, or price according to the number of hours worked, how much of something has been used, etc. in relation to a larger number of hours worked, a larger amount of something used, etc.: »

The bonuses for part-time employees should have been prorated based on their hours.

proration noun [U]
► »

The Fund and Investment Manager may share facilities common to each, with appropriate proration of expenses between them.


Financial and business terms. 2012.

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Look at other dictionaries:

  • proration — 1923, from PRORATE (Cf. prorate) + ION (Cf. ion) …   Etymology dictionary

  • proration statute — A statute providing that the amount of estate taxes shall be paid out of the estate before its distribution and shall be equitably prorated among the persons interested in the estate to whom benefit accrues, except as the testator directs… …   Ballentine's law dictionary

  • proration — noun see prorate …   New Collegiate Dictionary

  • proration — See proratable. * * * …   Universalium

  • proration — noun a) budgeting the proportional distribution or allocation of parameters, such as noise power and transmission losses, among a number of tandem connected items, such as equipment, cables, links, or trunks, in order to balance the performance… …   Wiktionary

  • Proration — A situation during a corporate action in which the available cash or shares are not sufficient to satisfy the offers tendered by shareholders. Therefore, a proportion of both cash and shares is granted for each offer tendered. When …   Investment dictionary

  • proration — n. proportional calculation, division proportionally …   English contemporary dictionary

  • proration — pro·ra·tion …   English syllables

  • proration — Apportionment. See apportionment; pro rata …   Ballentine's law dictionary

  • proration — noun the proportional limitation of production or distribution of something (e.g. crude oil or natural gas) to some fractional part of the total capacity of each producer • Derivationally related forms: ↑prorate • Hypernyms: ↑coordination …   Useful english dictionary

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