they give shares to the other cos owners that are currenly worth 4p.
We value you co at 1mil and we agree on that, , thats 25mil shares.
lets do this tho, we still give you 25mil shares but tell everyone we are paying 1.75mil and the shares are valued at 7p!
All the punters will think 'hey someone values the shares at 7p, lets buy them up to 7p.'
And as the company being bought its great for you as your shares that were worth 4p are now worth 7p!!
Easy wain tit!!!