The number of new acquirer shares that must be issued to complete a deal is unaffected by such derivative securities as options issued to Target's employees and warrants, as well as convertible securities.

Question

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Derivative securities like options, warrants, and convertible securities may eventually be exercised, converted or redeemed for common shares, which can increase the number of shares outstanding and thus affect the number of new acquirer shares that must be issued to complete the deal. Therefore, these securities must be taken into account in determining the total consideration to be paid in the transaction.

The Number of New Acquirer Shares That Must Be Issued