When a deal like Microsoft buying Activision goes through, does the money that the company is paying go to the company being bought? Does it go to the shareholders? Does the Activision stock just go away?
The reason I am confused is, if Microsoft gives Activision billions of dollars, at the end of the day, isn’t Microsoft effectively giving themself billions of dollars?
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I’m using Microsoft and Activision as an example, but I am curious about how this works in general.
In: 2
Company-A has many shareholders.
When Company-B “buys Company-A” what is actually happening is that they are buying **ALL** of the Company-A stocks and then dissolving the company once they have full ownership.
So, whoever owned Company-A stocks is paid for each share.
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It is usually more complicated than that, though, because most companies don’t want to spend all their cash on a buyout like that… so there is usually a lot of finagling over “We’ll give you $X cash and $Y worth of Company-B shares for each Company-A share.” and that kind of thing happening along with giving large shareholders board seats or whatnot in order to secure enough shareholder “Yes” votes to complete the sale.
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