What is an 'Acquiree'

An acquiree is a company that is being acquired or purchased in a merger or acquisition transaction. The acquiree is also known as the "target firm" during takeover scenario.

Usually, the acquiree will see a short-term movement in the price of its shares to resemble the price per share that was paid by the acquirer. This can be a positive or negative value.

BREAKING DOWN 'Acquiree'

For example, if ABC firm is trading at $12 per share and has 100,000 shares outstanding when it's acquired for 2 million by firm DEF, then ABC's share price should jump to approximately $20 per share (2,000,000/100,000 = 20).

Generally, a would-be acquirer wants to purchase a majority of the voting shares of the acquiree, so that it can gain operational control over the business. After an acquisition transaction, the acquirer may select to let the acquiree continue its operations unimpeded, or take steps to extract value from the business by cutting expenses or actively expanding its operations.

After a merger or acquisition, it is not uncommon for the acquiree to retain its operating name. For example, Amazon's July 2009 acquisition of the online shoe retailer, Zappos, which still operates under the name Zappos, while remaining part of Amazon's sprawling business operation. Other times, an acquiree's name is folded into the acquirer's name. For example, during the mid-80s into the early 90s, United Airlines acquired much of Pan American World Airway's (Pan Am) operational assets, changing the name to United Airlines. Sometimes an acquirer takes an acquiree's name. In 1998 NationsBank of Charlotte, North Carolina, acquired BankAmerica Corporation of San Francisco, shortly after that creating and rebranding under the name known today: Bank of America.

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