stock swap- acquirer stock price changes?

i have a quick question.

say a company worth $10/shr agrees to acquire a company for a share of stock for the other companies share.

lets say the acquirer company drops to $8 a share before the deal goes through.

how does this affect the "cost" of acquisition?

of shares outstanding would still be the same and accretion/dilution really shouldnt be affected correct?

the losers would just be the holders of the stock who lose market cap?
is the "cost" of acquisition really affected in a stock swap deal.

any info is appreciated.

 

Can't add too much input in this, as I'm not in the field or even at IB firm, but from what I've seen, an all-stock offer would have a collar, whether price, value or share for up or down movement. Not all deals would include this I assume. How this would affect acquisition I believe is that it keeps things within a range, without a collar, and if you're offering 100 shares, your offer is now $800, not $1,000. I guess why cash in hand holds value in M&A deals, removes the exchange risk.

Something quick I found on Google Search - http://www.stronghold-advisors.com/newsletters/article2yearend07.pdf

http://www.classiccmp.org/transputer/finengineer/%5BBooz%20Allen%20Hami…

 

so if it was fixed exchange ratio and the acquirers stock price fell. accretion/dilution would not change as # of shares issued/future earnings wouldnt change

basically just the deal would be worth less and the acquired would get screwed with less market cap?

is my logic correct?

 

Yes.

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