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| davidrnelso1 |
 Posted: Wed Jul 02, 2008 1:46 am Post subject: mergers and acquisitions |
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New Poster
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| What happens to my stock if it is acquired by a bigger company? |
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| Dave Rathbun |
| Posted: Wed Jul 02, 2008 9:15 am Post subject: |
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CFO
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It depends on the merger contracts.  In some cases you might be issued shares of the acquiring company, that's how the merger with Disney / Pixar went. Pixar shareholders got DIS stock.
In other cases it's a cash buyout. The company is essentially buying all of the outstanding shares. |
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| davidrnelso1 |
| Posted: Wed Jul 02, 2008 3:59 pm Post subject: |
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New Poster
Joined: 02 Jul 2008
Posts: 2
This Month: 0
5684.19 e$
Net worth: 5,684.19
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| Thanks for your reply Dave, your answer was helpful. My own research sent me off on a tangent. I came across some articles and stats about investors making money off of public to private buyouts and vice versa. It seems to have the same fundamentals as value investing. Am I making sense, or did I stumble onto a scam site. It seems if you position yourself ahead of the hedge funds there is potential for big gains either way. |
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| Dave Rathbun |
| Posted: Wed Jul 02, 2008 4:31 pm Post subject: |
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CFO
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As a strategy, it's tough. At least in my opinion. You have to be better at spotting acquisition targets than the folks that do that for a living, and then you have to buy into the stocks ahead of time. For example, did anyone really know that BUD was under consideration for a takeover? How about Yahoo? Both have had their shares rise (and then drop again in the case of Yahoo) due to acquisition rumors.
At various times I have owned different stocks that were acquired. I owned Pixar shares, and as mentioned in my earlier reply got Disney stock during the buyout. I owned shares in a company named Brio and got cash for those. So it really depends on how the contract is done.
When a company is very expensive (like Pixar) it is usually a stock or "funny money" deal. Disney could not afford 8 billion dollars of cash to buy out the company, so they exchanged stock instead. SAP recently bought out Business Objects, and that was a cash deal.
You can make money on a stock buyout but you have to sell the shares that you're given in exchange for your original holding. In theory they should be worth more, as the acquiring company typically pays a premium to the current share price. |
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