What is a stock swap?

Share exchange is a process in which shares of one company are 'exchanged' for an agreed number of shares in another company, often in the context of a merger or acquisition. The acquiring party pays the shareholders of the target with a fixed number of its own shares for each share of the company being acquired.

This mechanism is often used to restructure ownership interests without cash payments.

Example: "Exxon Mobil Corp. bought XTO Energy Inc. in an all-stock deal of $31 billion, where XTO shareholders received shares in Exxon Mobil."