vendor placing

vendor placing
A method of using shares to fund an acquisition by allotting shares in the purchaser to the vendors in exchange for shares in the target (or other assets) so falling within the exemption to the Companies Act 1985 pre-emption rights requirements for issues other than cash (section 89(4)). The consideration shares are then placed on behalf of the vendors by the purchaser's bank so that the vendors will receive cash (the proceeds of sale of shares by the purchaser's bank).
A clawback (normally by open offer although it can theoretically be done by a vendor rights issue) is usually offered to the purchaser's shareholders if the new shares represent more than 10% of the company's existing issued share capital or are issued at more than a 5% discount.
Related links

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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  • vendor placing — ➔ placing * * * vendor placing UK US noun [C, usually singular] COMMERCE, FINANCE ► a situation in which a company buys a business by making shares available to raise money to pay for the business: » The group is raising £5.3m through a vendor… …   Financial and business terms

  • vendor placing arrangement — An arrangement where US shareholders agree to appoint an independent agent to receive securities offered in a takeover offer and sell them immediately into an existing non US market, returning the proceeds to the US shareholders. The Securities… …   Law dictionary

  • vendor placing — A type of placing used as a means of acquiring another company or business. For example, if company X wishes to buy a business from company Y, it issues company X shares to company Y as payment with the prearranged agreement that these shares are …   Accounting dictionary

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  • vendor placing — / vendə ˌpleɪsɪŋ/ noun the act of arranging for an issue of new shares to be bought by institutions, as a means of financing the purchase of another company …   Dictionary of banking and finance

  • vendor placing — …   Useful english dictionary

  • cash box vendor placing — A method of raising cash from the issue of equity securities which is characterised for Companies Act 1985 purposes as a vendor placing; the non cash assets which are acquired are preference shares in a special purpose subsidiary whose only… …   Law dictionary

  • placing price — The price at which the placing or vendor placing shares are offered to placees. Practical Law Dictionary. Glossary of UK, US and international legal terms. www.practicallaw.com. 2010 …   Law dictionary

  • vendor rights issue — An alternative to a vendor placing with open offer. A hybrid structure, which is complicated and unusual, involving the clawback to shareholders being made on provisional allotment letters rather than application forms. The advantage for… …   Law dictionary

  • placing agreement — The agreement between the buyer and the bank setting out the terms on which the vendor placing will be conducted. Practical Law Dictionary. Glossary of UK, US and international legal terms. www.practicallaw.com. 2010 …   Law dictionary

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