In acquisitions involving a U.S. public company seeking to acquire another U.S. public company, the form of consideration to be paid to the target company’s shareholders can affect the required documentation and deal process. A public company acquiror can offer the target company’s shareholders consideration in the form of cash, stock, or a combination of cash and stock. This article will explore public company M&A deals involving 100% stock consideration.

The merger agreement will describe the conversion of the shares and set forth the exchange ratio. The exchange ratio is the number of new shares that will be issued in exchange for every one share of the target company. For example, in Exxon Mobil’s 2024 acquisition of Pioneer Natural Resources, each share of Pioneer Natural Resources was converted into the right to receive 2.3234 shares of common stock of Exxon Mobil.

Promptly after signing the merger agreement, the acquiror and target companies will each publicly file a Form 8-K with the Securities and Exchange Commission (SEC) that summarizes the main terms of the merger. The Form 8-K will typically describe key terms such as the merger structure, treatment of equity awards, and closing conditions. The merger agreement will be attached as an exhibit to the Form 8-K.

The acquiror company will then focus on preparing and filing a Form S-4 registration statement with the SEC. A Form S-4 is used when a merger involves stock consideration. The Form S-4 is used for registration of the securities to be issued in connection with the transaction under the Securities Act of 1933. If the merger consideration is 100% cash, the company will instead file a merger proxy statement with the SEC on a Schedule 14A.

The Form S-4 registration statement is a lengthy disclosure document. It requires the acquiror and target company to work in close coordination in order to prepare it. The Form S-4 contains a number of standard sections, including a description of the companies, risk factors, a summary of the merger, information about the special meeting, and disclosure about the interests of the target company’s directors and executive officers in the merger.

Once the acquiror company files the Form S-4 registration statement, it undergoes review by the SEC. The SEC will typically revert with a comment letter, asking the company to modify or clarify certain disclosures. The company will respond by filing an amendment to the registration statement, known as a Form S-4/A. Depending on the nature of the SEC comments, the company may be required to make multiple Form S-4/A filings before clearing SEC comments. At this stage, the acquiror company can file a definitive merger proxy. After the definitive proxy statement has been filed, a special shareholder meeting will be held for the target company’s shareholders to vote on the merger proposal.