When would an acquirer choose to pay with stock instead of cash?

Answer

Stock is preferred when: (1) the acquirer believes its stock is overvalued (paying with 'expensive' currency); (2) the deal is large and the acquirer's cash/debt capacity is limited; (3) the acquirer wants to share deal risk with target shareholders (if revenue synergies don't materialize, both sides feel the pain); (4) tax-free reorganization is desired (targets sometimes prefer stock for tax deferral). Cash is preferred when the acquirer's stock is cheap, interest rates are low, or management wants to signal confidence in the deal.