When an acquisition is made for cash, it is taxable in the hands of the target company shareholders, while a share swap is usually non-taxable.

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In a cash acquisition, the target company's shareholders receive cash for their shares, which is typically considered a taxable event, resulting in capital gains tax. In contrast, a share swap, where shareholders receive shares of the acquiring company instead of cash, is often structured as a tax-free reorganization, avoiding immediate taxation.

When an Acquisition Is Made for Cash, It Is Taxable