I own shares in a company that has become the target of a takeover bid.
Shares have since risen as the offer came at a premium. What happens next and how can I give my opinion on whether the acquisition will go through?
Buyout bonanza: London’s stock market is in the grip of a takeover fueling frenzy, with new bids soon to follow
Jessica Clark, from the Ny Breaking City and Finance team, says: The London stock market is in the grip of a takeover fueling the frenzy, with new bids quickly following.
Because municipal experts predict that the buying spree will continue, it is important to know what to do if a company in which you own shares becomes a takeover target.
What to share in a takeover bid?
A target company’s stock price typically spikes upon news of a takeover bid.
If the stock reaches the offer price, it is a good sign that investors are interested in the deal. But if the target company’s shares exceed that amount, it indicates that the market is expecting a higher bid and even a bidding war.
And if the price remains below the offer value, shareholders are likely to be unimpressed with the offer or think it will fail.
What would I do next?
Shareholders have various options after a takeover bid. You can sell your shares at a premium after a bid.
For example, shares in Royal Mail owner International distribution services were worth 214 cents each before a bid from the Czech Sphinx, Daniel Kretinsky. After the board agreed a deal with the billionaire last week, the price rose to 335 cents.
An IDS investor with 1,000 shares would get £3,350 at that price – around £1,210 more than they were worth before the offer.
If you do nothing and the deal goes through, your shares will be replaced with cash or stock in the new company, depending on the terms of the offer. But keep in mind that if a deal falls through, the value of the company’s stock could fall.
How can I have my say?
All acquisition deals must be voted on by shareholders so that investors can have their say.
Normally you get one vote per ordinary share held.
Many private investors buy shares through an investment platform such as AJ Bell, Hargreaves Lansdown and Interactive Investor.
To find out how to vote, you must contact the platform on which you purchased your shares.
Investors who hold shares indirectly through funds or pensions do not get a vote.
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