The theoretical cost of the
reverse acquisition was determined based on the price of the Company's common shares on the date of the Transaction and was allocated to Company's pre-Transaction assets and liabilities on a relative fair value basis.
Generally, a
reverse acquisition occurs when a larger corporate group or corporation (by reference to fair market value) is acquired by a member of a smaller group or corporation.
David White, partner at Grant Thornton, advised on the transaction, which was a
reverse acquisition of Fuse8 into Award International, which was on the London exchange PLUS.
The transaction was classified as a merger but accounted for as a
reverse acquisition. The company adopted purchase accounting on completion of the deal.
Effect of
reverse acquisition. The
reverse acquisition rules of Treas.
(DGIC) and Nestle Ice Cream Company, LLC (NICC) should be considered as a "
reverse acquisition under the purchase method of accounting, which deemed NICC to be the acquirer and DGIC to be the acquiree.
The ED modifies the circumstances in which a business combination could be regarded as a
reverse acquisition. It clarifies that for all business combinations effected through an exchange of equity interests, the acquirer is the combining entity with the power to govern the financial and operating policies of the other entity (or entities) so as to obtain benefits from its (or their) activities.
The
reverse acquisition by USWeb of CKS was announced in early September.
One common fact pattern which has generated a considerable number of ruling requests is the
reverse acquisition. A
reverse acquisition occurs when a common parent corporation ("X corporation") or a subsidiary of X corporation acquires stock or substantially all of the assets of another corporation ("Y corporation") resulting in affiliation with X corporation or its subsidiary, in exchange for stock of X corporation and the stockholders of Y corporation own after the acquisition more than 50% of the fair market value of the outstanding stock of X corporation.
Concerning Target's separate financial statements, the EITF concluded the transaction should be accounted for as a
reverse acquisition of Target by Subsidiary in accordance with paragraph 70 of Opinion no.
Adjusted EBITDA is calculated as EBITDA excluding share-based compensation expense,
reverse acquisition costs, acquisition-related costs and foreign exchange gain/loss.