Hi,
I'm not sure if it would be against forum rules to mention the share in question so I'll leave it out for now.
I've been sent a tender offer for the shares of X company that I hold as they are merging with company Y, so I can either (some quotes from the actual offer are included):
(a) Do not accept the tender offer;
"Following the tender offer, it is expected that Y will proceed with a merger to acquire all of the X shares from holders who did not accept the offer."
"Shareholders who don’t participate will retain their shares and receive holdings in the new company proportional to their current stake in X. This will apply to whatever Y shares are left over after the exchange. The exchange, however, would not allow shareholders to receive more than 8.2136 shares of Y stock for every one share they own in X."
(b) Accept the tender offer;
"The tender offer is designed to allow shareholders of X to exchange their shares at a 10% discount in value. In other words, for every 100.00 worth of X shares held, shareholders will be credited with approximately 111.00 worth of Y shares." (is this not 11%?)
So I haven't encountered this situation before. I guess it happens for many reasons, a merger such as the above or if a public company wants to become private. I'm trying to the determine the pros and cons of each option, can anyone offer any advice on this? Accepting the offer would seem like a good opportunity to gain 11% instantly. What happens if I don't accept the offer? Are there any tax implications on either option?
Thanks,
Daniel
I'm not sure if it would be against forum rules to mention the share in question so I'll leave it out for now.
I've been sent a tender offer for the shares of X company that I hold as they are merging with company Y, so I can either (some quotes from the actual offer are included):
(a) Do not accept the tender offer;
"Following the tender offer, it is expected that Y will proceed with a merger to acquire all of the X shares from holders who did not accept the offer."
"Shareholders who don’t participate will retain their shares and receive holdings in the new company proportional to their current stake in X. This will apply to whatever Y shares are left over after the exchange. The exchange, however, would not allow shareholders to receive more than 8.2136 shares of Y stock for every one share they own in X."
(b) Accept the tender offer;
"The tender offer is designed to allow shareholders of X to exchange their shares at a 10% discount in value. In other words, for every 100.00 worth of X shares held, shareholders will be credited with approximately 111.00 worth of Y shares." (is this not 11%?)
So I haven't encountered this situation before. I guess it happens for many reasons, a merger such as the above or if a public company wants to become private. I'm trying to the determine the pros and cons of each option, can anyone offer any advice on this? Accepting the offer would seem like a good opportunity to gain 11% instantly. What happens if I don't accept the offer? Are there any tax implications on either option?
Thanks,
Daniel