Proration

DEFINITION of '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.

BREAKING DOWN 'Proration'

When you tender an offer for a corporate action, the company making the bid will attempt to fulfill the tender as you requested. However, if the company does not have enough stock or cash, a mixture will be given in order to appease all stockholders.

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RELATED FAQS
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  3. How is a tender offer used by an individual, group or company seeking to purchase ...

    Learn how tender offers are used in takeover attempts, and understand the difference between a hostile takeover and a friendly ... Read Answer >>
  4. What usually happens to the price of a stock when a tender offer for shares of the ...

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  5. If a company offers a buyback of its shares, how do I decide whether to accept the ...

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    Since the passing of the Sarbanes-Oxley Act, a significant number of public companies have chosen to go private. The reasons ... Read Answer >>
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