What is the impact of mergers and spin offs (demerger) on shares?

Mergers:

When two companies decide to team up. Shareholders of the acquired company usually receive brand-new shares in the freshly combined entity. The value of these new shares depends on the original companies’ values, exchange ratio terms, and the market vibes during the merger.

Spin-Offs or demerger:

Now, if a company chooses to go solo and spins off one of its divisions or subsidiaries into a new, independent player. Shareholders of the original company might get shares in this new, independent entity. The value of these shares is akin to a stock fortune teller’s mystery – influenced by market conditions, the strength of the new company, and the spin-off terms.

In a nutshell, the stock world resembles a bit of a financial journey during mergers and spin-offs. The impact on shares is a complex dance influenced by the specific terms of these corporate actions and the overall market mood at that time.

So in effect in case of mergers generally the shares of the acquired company gets extinguished and the shares in the acquiring company are issued in lieu thereof. In spin off’s additional shares of the company or division which is being demerged is issued in addition to the existing company shares from which the said spin off is taking place