Share Prices - Trends when companies merge?
Discussion
I'm not into investing in shares etc, so really don't know much about this, but my wife and I have a number shares in an oil and gas support\engineering company which is due to merge.
We plan to sell 50% of our shares, as we're getting 2 for 1 during the merger. But based on trends and values, are you best selling as soon as the shares float first thing, or give it a few hours or days to settle down?? Perhaps not an easy prediction, I don't know. I believe they will be listed in Paris and NY if that makes a difference with times...
We plan to sell 50% of our shares, as we're getting 2 for 1 during the merger. But based on trends and values, are you best selling as soon as the shares float first thing, or give it a few hours or days to settle down?? Perhaps not an easy prediction, I don't know. I believe they will be listed in Paris and NY if that makes a difference with times...
Edited by scz4 on Monday 16th January 22:04
jeff m2 said:
Company A is buying company B
The shares of B will often increase as people hope company A will have to increase their offer to get the deal done. Pushing up the price of B
The shares of company A can sometimes drop if people think it may take a long period of time for company A to benefit from the aquisition
That's the basic theory.
It sounds as though the company that you own has already accepted the sale and you will receive two shares of company A for each company B that you owned.
This does not mean you have doubled your money in one day
.
But you will usually do OK,
Whether you wish to halve your investment is a different matter.
That's exactly what's happening. Tomorrow is officially the first day of the new company trading. So just trying to work out our tactics for selling, or not, tomorrow am. The shares of B will often increase as people hope company A will have to increase their offer to get the deal done. Pushing up the price of B
The shares of company A can sometimes drop if people think it may take a long period of time for company A to benefit from the aquisition
That's the basic theory.
It sounds as though the company that you own has already accepted the sale and you will receive two shares of company A for each company B that you owned.
This does not mean you have doubled your money in one day
.But you will usually do OK,
Whether you wish to halve your investment is a different matter.
jeff m2 said:
Do a seacrh on your company A and find the concensus on the deal.
i.e. do the guys that cover this stock think it was a good deal for the buyer.
If they think it was good, it may be worth keeping the new stock.
Alternativly, if you want to sell all or some, consider putting in a high limit sell order before the market opens as the first 30minutes can have some silly prices.
If it doesn't execute, you could then cancel the order and sell at merket (or a more realistic limit sell price).
Thanks for the advice. i.e. do the guys that cover this stock think it was a good deal for the buyer.
If they think it was good, it may be worth keeping the new stock.
Alternativly, if you want to sell all or some, consider putting in a high limit sell order before the market opens as the first 30minutes can have some silly prices.
If it doesn't execute, you could then cancel the order and sell at merket (or a more realistic limit sell price).
Just to confirm, let's just say we have 10 shares, but will receive another 10 for that share tomorrow. If we put high limit sell order on selling all 10 and it goes through first thing, I assume the second share will still be issued at some point?
I'm not sure when we we'll see the new allocation in the system.
Edited by scz4 on Monday 16th January 23:05
NickCQ said:
scz4 said:
That's exactly what's happening. Tomorrow is officially the first day of the new company trading. So just trying to work out our tactics for selling, or not, tomorrow am.
I would wait a few days for the market to become a little less volatile - as a retail client you can rely on getting crap execution in periods of volatility. What an anti climax this morning
We've held onto our shares.... with the new allocation and share price, our value is pretty much the same as it was yesterday under company A. Will see how the market responds over the next few weeks, quite a few external factors could influence this. walm said:
I am a bit late to this obviously but this is exactly right.
Merger day isn't anything special.
The announcement of the merger, any synergies, the premium paid and regulatory/board approval are all stock price moving events (potentially).
On the day itself there isn't any NEW news so nothing changes.
In short - selling 50% makes no sense!!!! The value doesn't double overnight otherwise everyone would be buying yesterday!!!
Your response makes perfect sense on reflection. I guess there was so hype between fellow colleagues that some money (certainly not double) could be made due to the 2 for 1 offer. Share price has been pretty static today, moving 30 or 40 cents max (around 1%) Merger day isn't anything special.
The announcement of the merger, any synergies, the premium paid and regulatory/board approval are all stock price moving events (potentially).
On the day itself there isn't any NEW news so nothing changes.
In short - selling 50% makes no sense!!!! The value doesn't double overnight otherwise everyone would be buying yesterday!!!
NRS said:
Were both companies publicly listed (i.e. on the stock market)? If one was not there could be some bigger movements once more information comes out as it will show how good a deal the buying company got, as there would be less information previously available about the company being bought if it was a privately owned company.
Yes both were previously listed. Now approx 44k employees, so a sizable company. Gassing Station | Finance | Top of Page | What's New | My Stuff