Contingent value rights
Encyclopedia
A Contingent Value Rights (CVR) is a type of option
that can be issued by the buyer of a company to the sellers. It specifies an event, which, if triggered, lets the sellers acquire more shares in the target company.
The New York Times claims it harms both the sellers and the buyers, since it could cause the CVR issuer to make a big payment in case the event is triggered and the underlying stock price is high, or leave the holder of the CVR with worthless shares in case the stock price plunges.
Option (finance)
In finance, an option is a derivative financial instrument that specifies a contract between two parties for a future transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation, to engage in that transaction, while the seller incurs the...
that can be issued by the buyer of a company to the sellers. It specifies an event, which, if triggered, lets the sellers acquire more shares in the target company.
The New York Times claims it harms both the sellers and the buyers, since it could cause the CVR issuer to make a big payment in case the event is triggered and the underlying stock price is high, or leave the holder of the CVR with worthless shares in case the stock price plunges.
External links
- http://www.investopedia.com/terms/c/cvr.asp - CVR on Investopedia
- http://papers.ssrn.com/sol3/papers.cfm?abstract_id=424903 - Contingent Value Rights in Acquisitions: Theory and Empirical Evidence