Shares of a foreign public company (“Foreign Target”) were exchanged by a Canadian partnership (“Vendor”) for treasury shares of another foreign public company (“Foreign Purchaser”) and cash. Although the cash received for each share tendered was specified in the offer, the fraction of the total consideration that it represented could not be determined until the date of the exchange because the total exchange consideration was dependent upon the average trading price of Foreign Purchaser’s shares immediately before the exchange. Except respecting the treatment of the cash consideration, all the s. 85.1(5) conditions were satisfied. Was the s. 85.1(5) rollover applicable?
CRA quoted S4-F5-C:
Subsection 85.1(1) may apply where a vendor receives newly issued shares of the purchaser and non-share consideration for each exchanged share. The purchaser’s offer must clearly indicate which fraction of each exchanged share is exchanged in consideration for the newly issued shares of the purchaser and which fraction of each exchanged share is exchanged for non-share consideration.
and then stated:
[W]e note that the position in point 2 of paragraph 1.7 [of S4-F5-C1] would equally apply to a foreign share for share exchange… . Nonetheless, where the purchaser’s offer does not clearly specify the fractional information noted in point 2 of paragraph 1.7 of the Folio…the requirements of 85.1(5) will not be met in a situation where a vendor receives newly issued shares of the purchaser and non-share consideration for each exchanged share.