Why might a company proceed with a dilutive all-stock deal?

A company might proceed with a dilutive all-stock deal primarily to leverage market conditions and preserve cash. In such situations, the acquirer can take advantage of favorable market conditions that may allow it to use its own stock, which might be valued highly by investors, rather than depleting cash reserves or incurring debt to finance the acquisition. Choosing to use stock as currency for the deal can also allow the acquirer to maintain liquidity for other operational needs or investments, thereby preserving cash for future opportunities or to cover unexpected expenses.

While it is important to note that a stock deal may result in dilution for existing shareholders, this strategy is often employed when a company assesses that the long-term benefits of acquiring the target company outweigh the immediate impact on share value. This decision reflects a careful assessment of market conditions and strategic alignment rather than a direct goal to enhance shareholder value in the short term or to maintain operational control over the target company.