what is a contingent value right cvr 
the term contingent value right cvr refers to a right often granted to shareholders of a company facing restructuring or a buyout these rights ensure that the shareholders get certain benefits if a specific event occurs usually within a specified time frame these rights are similar to options because they frequently have an expiration date beyond which the rights to the additional benefits will not apply cvrs are usually related to the performance of a company s stock understanding contingent value rights cvrs a contingent value right is tied to a theorized future event such as an acquisition cvrs are created when the two companies in an acquisition come to different conclusions about the value of the target the acquirer may feel that the current value of the target is limited with the potential for a higher value the target on the other hand may value itself higher for any number of reasons including a new product or technology cvrs help bridge the gap between this difference in valuation an acquiring company can pay less upfront for the acquired company but if the acquired company hits certain performance targets in the future its shareholders will receive additional benefits shareholders who are given a cvr are granted the benefit only if the triggering event takes place in the given time frame if not the cvr becomes worthless and expires these benefits give shareholders additional shares of the acquiring company or they may provide a cash payment this is often linked if the acquired company s share price drops below a certain price by a predetermined date cvrs come with some risks that s because their real value is not discernible when they are issued the risk shareholders face remains unknown because these rights are based entirely on the anticipated price of the stock or some unforeseeable occurrence when cvrs are issued a portion of the acquirer s risk is transferred to the target company s shareholders this could have an adverse effect on any existing shareholders depending on the price paid to acquire the company types of cvrsthere are two ways that a contingent value right may be offered they may be traded on a stock exchange or may be non transferable cvrs that trade on a stock exchange can be bought by anyone which means they do not have to be current shareholders of the acquired company an investor can buy a cvr on an exchange up until it expires non transferable cvrs on the other hand apply only to current shareholders of the acquired company and are distributed at the time of the merger companies prefer non transferable cvrs as transferable cvrs listed on an exchange require regulatory work and incur higher costs cvrs as unsecured obligationsthe new york stock exchange nyse listed company manual refers to cvrs as unsecured obligations of the issuer an unsecured obligation also known as unsecured debt carries no collateral or backing by an underlying asset shareholders do not have a guaranteed right that the reward will be granted to them 1while they hold an obligation from a company investors who receive cvrs are more akin to options holders than to say bondholders unlike the latter they have no guarantee to be paid and they have no claim on the company s assets should their payment not materialize just like options all cvrs have an expiration date no additional benefit is paid to the shareholder other than the stock itself if the cvr expires example of a cvrin feb 2023 the pharmaceutical company astrazeneca purchased the pharmaceutical company cincor as part of the deal shareholders of cincor received non tradeable contingent value rights which are payable when the regulatory submission of a baxdrostat product is submitted by a specified time the value of the cvrs is 1 8 billion 2