"Acquisitions that are done as stock swaps are obviously not the same as cash transactions. Public companies often use their stock as trading currency for acquisitions since it has no cash impact on their business. However, stock transactions dilute the value of other shareholders, sometimes significantly. In a rising stock market no one really notices because the steady share price increase masks the dilution."
He's probably repeating secondhand an explanation he didn't understand the first time, because he got some of the words right but didn't make any sense. Whether you buy a company with cash, stock, bonds, favors, or anything else, the point is to get more than you pay for. AOL swapped some stock for control of Time Warner -- their stock was overpriced, TW was (arguably) underpriced, and when everything settled, AOL shareholders had lost 80% of their investment instead of 99% of their investment.
Trading $250 million in stock for $250 million worth of someone else' company isn't something you have to 'hide' with an increasing share price (and why would the price go up, if the company is blatantly devaluing itself?). Dodge didn't think this through, and it shows.
He's probably repeating secondhand an explanation he didn't understand the first time, because he got some of the words right but didn't make any sense. Whether you buy a company with cash, stock, bonds, favors, or anything else, the point is to get more than you pay for. AOL swapped some stock for control of Time Warner -- their stock was overpriced, TW was (arguably) underpriced, and when everything settled, AOL shareholders had lost 80% of their investment instead of 99% of their investment.
Trading $250 million in stock for $250 million worth of someone else' company isn't something you have to 'hide' with an increasing share price (and why would the price go up, if the company is blatantly devaluing itself?). Dodge didn't think this through, and it shows.