Which form of payment is preferable in an acquisition deal - cash or shares? One of the biggest-ever acquisitions of an Israeli company was the deal in which the US cybersecurity giant Palo Alto Networks acquired CyberArk in February. The acquisition involved a mix of cash and stock, meaning CyberArk shareholders received Palo Alto shares as part of the deal.
When the agreement was signed in summer 2025, CyberArk had a market cap of $25 billion. However, by the time the deal closed six months later, a decline in Palo Alto’s share price had caused the value of the deal to shrink to about $21.5 billion. Yet, in the time since, Palo Alto’s stock has surged by 125%, bringing the current implied value of the acquisition to over $40 billion. Consequently, CyberArk shareholders who did not rush to sell the shares they received benefited from a double-digit percentage increase in the value of their payout.
Another notable case from a few years ago was the acquisition of Israeli chip networking company Mellanox by the chip giant Nvidia. The acquisition was completed shortly after the outbreak of the Covid pandemic, valuing Mellanox at about $7.4 billion, with the entire amount paid in cash.
Mellanox founder and CEO Eyal Waldman, who received about $250 million from the deal, later said he had not wanted to sell, "But as a publicly-traded company, when you receive an offer that is 40% above the market cap, you can't say no." In hindsight, had the payment- or even a portion of it - been made in Nvidia shares, Mellanox shareholders (Waldman included) would have fared far better. Since the acquisition closed, Nvidia's stock has surged by more than 3,000% (a 31-fold increase).
So while the deal's valuation is important, the "currency" of the acquisition - cash, stock, or a combination of the two - also matters significantly.
Google paid cash
After several years of sharp market gains, stocks have become a convenient acquisition currency due to their high value. Indeed, some of the largest deals announced this year were executed entirely in stock. For instance, Elon Musk’s SpaceX, which held an IPO in June, carried out a massive all-stock acquisition, paying $60 billion for Anysphere, the developer of the AI coding tool Cursor. In contrast, the mega-deal (yet to be finalized) in which Paramount is acquiring Warner Bros. for about $111 billion involves a cash payment.
In Israel, recent major tech deals have been predominantly cash-based. For example, Google paid $32 billion for Wiz, and ServiceNow acquired Armis for $7.75 billion.
Data published by Wells Fargo Bank sheds light on this trend over recent years. They showed that in 2022, following the interest rate hike and stock market declines, 72% of US deal volume was all-cash transactions, while in the ensuing three years, that figure dropped to between 55% and 59%. Conversely, the use of mixed cash-and-stock payments has risen in recent years, reaching 32% of deal volume in 2025, with stock-only deals accounting for 13% of acquisition amounts that same year.
"I wouldn't say the market is decisively shifting toward either cash or stock; it is more cyclical," says Natti Ginor, head of Jefferies’ investment banking operations in Israel. He recounts, "During the low-interest-rate era, debt was cheap, making all-cash deals much easier to finance. As financing costs rose, buyers became more sensitive to leverage and more willing to use stock or mixed consideration, particularly in larger deals. The optimal structure remains highly dependent on the specific transaction."
Upside versus risk
If so, how is the optimal structure determined? According to Adv. Shirel Guttman-Amira, a partner and Head of the Corporate, Securities, and Capital Markets Department at Agmon and Tulchinsky, one of the considerations is the acquirer's flexibility: "When a company is highly leveraged, it will find it difficult to secure cash financing for an acquisition, whereas an unleveraged company possesses greater flexibility."
Another factor, she observes, is whether the buyer wants a strategic partner for the long term, as in a share-based deal, since the owners of the acquired company become shareholders in the acquiring company on completion. Adv. Guttman-Amira cites the example of Delek Group’s oil company, Ithaca, which incorporated operations from energy company ENI and allocated shares to it. By doing so, Delek "Gained a strategic investor with significant added value." (Jefferies advised Ithaca, in which Delek holds a stake, on the transaction.)
She explains that if the acquirer anticipates significant upside (value appreciation) post-acquisition, it might prefer a cash deal (avoiding sharing that upside with others). Conversely, if the company is risk-averse, it might prefer a share-based structure.
Jefferies is currently one of the most active investment banks in Israel and Ginor also addresses the issue of upside: "The most critical point is that the choice between cash, shares, or combining them is essentially a decision on how risk and future potential are distributed between the buyer and the seller."
Ginor adds, "Cash is, of course, the simplest route. The seller gains certainty and immediate liquidity, while the buyer retains 100% of the future potential should the deal succeed. The trade-off is that the buyer effectively bears all the risk. If synergies fail to materialize or the acquired business falls short of expectations, the seller has already received the payment and moved on."
On the other hand, Ginor continues, "All-stock deals flip this equation to some extent. Instead of liquidating their entire holding, the seller remains invested in the acquiring company and shares in whatever value is ultimately created. It is often attractive when there is strong strategic logic, a sound industrial rationale for the business, and significant anticipated synergies, or when the seller believes further value will be created down the line."
Ginor explains that a hybrid structure is often a compromise. The seller gains some immediate liquidity while retaining exposure to the combined company, while the buyer preserves a degree of balance-sheet flexibility and limits dilution. "In many cases, this combination proves to be the most practical way to bridge valuation gaps or align interests for the future," he observes.
The decision that complicated matters for Teva
According to Ginor, the decision is ultimately driven by a combination of factors. The first is the stock's valuation. He says, "If the buyers stock is trading at a high market cap, using it as 'currency' for the acquisition becomes attractive. But if management believes its stock is undervalued, issuing shares to the seller can be one of the most expensive ways to pay for a deal."
Another factor Ginor cites is the balance sheet and financing capacity. Buyers with cash and low-cost access to capital can be more aggressive with the cash component. A further factor involves the seller's objectives. As Ginor explains, "A founder, family owner, or strategic shareholder might wish to remain invested in the new company. In contrast, a financial buyer, such as an investment fund with a limited time horizon, will focus more on certainty and liquidity, and less on future potential." Ginor also points to deal size as a determining factor, stressing, "The bigger the deal is for the buyer, the more significant a role shares play in the financing package."
A company that acted differently, and paid a heavy price for it, was Teva Pharmaceuticals. In 2016, it executed the largest acquisition in its history, paying over $35 billion for US company Actavis. Despite the deal's massive scale relative to Teva’s own valuation at the time, it was financed primarily with cash to avoid diluting existing shareholders.
Consequently, Teva took on a massive debt to finance the ill-fated acquisition and the debt subsequently weighed so heavily on the company that its very survival was threatened. Teva’s stock price collapsed, and the company was forced to implement an aggressive streamlining plan that included laying off thousands of employees and closing factories. Only now, a decade later, has the company put that venture behind it, with its bonds regaining investment-grade status rather than being rated as "junk."
"Value is psychological"
BDO partner in the corporate financing department Sagiv Mizrahi CPA points to another factor in determining acquisition payments: whether the two companies operate in the same sector (as opposed to, say, a financial buyer like a private equity fund). He says, "If the companies are in the same field and the aim is to merge into a larger entity, with synergies benefiting both parties, then, by definition, the seller will likely want shares in the merged company."
However, this raises the question of the percentage of ownership in the merged company: "The deal might entail the seller receiving only a 5% stake; in that case, they might say, 'That’s not appealing, I’d have no influence on the company, so I’d rather just take the cash.' Receiving a minority stake becomes a factor that tips the preference toward cash," he says.
He cites the pending merger between real estate firms Israel Canada and Acro as a prime example of a deal combining both components. Under the agreement, Israel Canada is buying Acro in a deal made up of 60% stock and 40% cash. "This is a clear-cut case where the combination and synergy between two industry giants are significant, and the terms resulted in the sellers receiving a substantial equity stake," Mizrahi remarks.
What happens when the buyer is a private company using stock for the purchase? A recent example is the deal in which AI giant OpenAI acquired Glass Imaging - a startup founded by Israeli entrepreneur Ziv Atar that develops AI-based smartphone image enhancement technology, for $300 million. According to a report in *Globes*, although the acquirer offered part of the consideration in cash, the sellers preferred to receive the entire payment in stock.
Mizrahi explains "Generally speaking, relatively young technology companies prefer to make acquisitions using stock because cash is their most critical resource, which they guard jealously. In OpenAI's case, receiving its stock is effectively like holding publicly traded shares. There is clearly a secondary market, and a sophisticated one at that, for these shares, even without an IPO, and there have also been statements indicating a future IPO. "The seller has an opportunity here to receive shares and join the wave of success."
Another massive deal in the AI market that did not materialize was the acquisition of Israeli company Decart for $6 billion by another private giant, Anthropic. In that case, too, the majority of the purchase price was intended to be paid in shares.
Adv. Amira Gutman notes in this context that privately held tech companies paying in shares "Ensure the sellers remain committed and usually retain them in management roles. This is done to keep them dedicated to continued value appreciation rather than moving on to the next startup. Tech deals often include 'earn-out' mechanisms - future compensation dependent on meeting specific milestones."
Ultimately, Adv. Gutman concludes, "In purely economic terms, there shouldn't be a difference between cash and share-based compensation, as they are supposed to hold the same value."
Mizrahi agrees: "It is more of a psychological matter. At the end of the day, value is value - whether in cash or shares. Yet, there is a psychological aspect on the cost of capital. We clearly saw that when interest rates began to rise in 2022-2023, the deal mix shifted more toward shares because acquirers realized that cash had become more expensive."
Published by Globes, Israel business news - en.globes.co.il - on September 27, 2026.
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