A company I invested in has just had a takeover offer. I've never owned shares of any company that had this kind of situation before. What exactly happens in this situation?
It depends on how the takeover offer is structured. Sometimes the offer will involve buying all outstanding shares of the target company at a certain price. Sometimes you will get a certain number of shares in the new combined company, based on how many you currently own. And sometimes its a mix of cash and shares. Either way, you should expect the current share price to rise up towards whatever the offer price was, if its a credible offer. You might want to consider the offer- is it likely to go through? If yes, and you are happy with the terms, then you should probably hold on and get whats being offered. If not, you might do well to sell quickly on the bump you are likely receiving at the moment.
What happens to your shares if a hostile takeover bid is made for the company you invested in?
November 25, 2008 By 2 Comments
nothing really except your stock price probably already rose. they might also have a stock split after the takeover. and of course they'll probably change the name of the company. be careful though as the company that took over probably took a lot of debt.
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It depends on how the takeover offer is structured. Sometimes the offer will involve buying all outstanding shares of the target company at a certain price. Sometimes you will get a certain number of shares in the new combined company, based on how many you currently own. And sometimes its a mix of cash and shares. Either way, you should expect the current share price to rise up towards whatever the offer price was, if its a credible offer. You might want to consider the offer- is it likely to go through? If yes, and you are happy with the terms, then you should probably hold on and get whats being offered. If not, you might do well to sell quickly on the bump you are likely receiving at the moment.
References :