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If the deal doesn't go throught immediately, then all bets are probably off. That is, there is likely no deal to speak of, because the deal was constituted at the existing market value of each company's stock. I would think it highly unlikely that both companies would sign this deal without the opportunity to execute it until some unspecified (or even specified, perhaps) period of time elapsed. This would be taking on an enormous amount of risk. Anything could happen to either company's stock, and the longer the period, the riskier the situation.

If the deal survived, and assuming the agreement was silent on this exact issue, it could get ugly in a hurry. Company A could claim that the deal was negotiated for X shares, and that's what company B agreed to. Company B would no longer feel that X shares is fair value for their intellectual property, but in fact due to the split 2X is. At some point I would guess that some dollar amount appears somewhere in the deal. This would probably lead to a decision in favor of 2X shares instead of just X.

If no dollar amount was ever mentioned and this deal is still alive, then both of these companies will have a nice court battle unless someone defers. I would only have to add that they both drew up a sloppy deal and probably deserve each other as business partners.
(jus' kidding around) :)

hope this helps...


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