What happens to shares in a takeover?

B

BadSanta

Registered User
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Hi all,
this is a general question and not related to any one share. I was just wondering what happens to shares one would hold in a company if another organisation buys them out?
for example, if an irish bank was bought by a spanish bank, do the shareholders of the irish bank get shares in the spanish bank, or a cheque for the value of their shares at the time?

reason im asking is im paying attention to an exploration stock that is rising and there is a possibility of a bid to buy them out and I am jsut wondering if i buy in what happens if they are bought out.

thanks...
 
I think you end up with shares in the new company relative to the value of the takeover offer. Company A buys out company B, Then its all company A from then on. Haven't ever had to go through one but I always thought that was one of the ways it worked.Also I think the only time you get cash is if the company is taken private and your shares are forced out of your hands. Correct me if I'm wrong
 
Hi Bad Santa

You could either get shares or cash.

At the moment with cash in short supply, companies tend to use shares for takeovers.

But if an acquiring company has cash or access to cash, they might well use that.

Brendan
 
What timing! I just went through this scenario yesterday. I had shares in company A and had been holding them for the long haul but Company B had been buying up shares and had pretty much taken over. Company B made a cash offer only for the remaining shares - no option to exchange tax free for shares in the acquiring Company B. So it was either tender for cash at the price finally agreed between both companies by yesterday's deadline or be stuck with a relatively illiquid stock. On other occasions I have ended up with shares of the acquiring company so things can go either way.
 
What about in the case of a merge between company A and company B where a new unified company is created???
 
A MERGER. I bought 300 shares in Glaxo Smithkline for £150 EACH and then they merged with beechams. my shares went up because it was perceived by the market place (buyers and sellers) as a good thing, Glaxo bought out market share so therefore it was interesting to us and we bought more in anticipation of the company doing well. then beechams worth was added to the portfolio and a dividend was payed in either shares (prefered) or cheque.
 
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