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Loan and Mortgage Terms Glossary

Cash-Out Merger:

A merger in which the acquiring company buys the stock of the target company for cash, in effect cashing out the stock of the company being absorbed. This is a variation of a traditional merger in which shareholders of the target company trade in their stock for stock in the acquiring company. By paying cash, the acquiring company reduces its capital by the amount of the cash-out, but gains the assets of the target company. In a cash-out merger, shareholders of the target company have no interest in the company that results from the merger.


 
     
 
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