Company bought out - What happens to my SIP shares?
Discussion
Hi all,
On Tuesday the company I work for agreed a deal to be bought out. The share price went up 70-80%, and is now trading slightly below the offer price the other company made. Great news as someone who has been paying in to the SIP scheme for a while now.
I have a decent amount of shares in there which are over 5 years old, and therefore I could cash those out tax free today. The question I have is should I be cashing out these shares now at around 98% of the offer price, or will I be offered the full offer price for them in time anyway?
Thanks for any help.
On Tuesday the company I work for agreed a deal to be bought out. The share price went up 70-80%, and is now trading slightly below the offer price the other company made. Great news as someone who has been paying in to the SIP scheme for a while now.
I have a decent amount of shares in there which are over 5 years old, and therefore I could cash those out tax free today. The question I have is should I be cashing out these shares now at around 98% of the offer price, or will I be offered the full offer price for them in time anyway?
Thanks for any help.
Sell!
Holding a material amount of shares in your employer is a risky strategy. Many articles explaining this eg:
https://www.cnbc.com/2018/12/12/workers-with-compa...
Holding a material amount of shares in your employer is a risky strategy. Many articles explaining this eg:
https://www.cnbc.com/2018/12/12/workers-with-compa...
Thanks for the replies guys. We've been further informed on the acquisition, and what it means for share holders. I'll be keeping hold of all the shares I have until the deal happens. There is a risk of it falling through, but this does feel small enough for me to be comfortable with.
Sell, we've just been through this.
I sold 99% of it at a 20 cents below the offer.
Then the renegotiated the deal and the offer price went down a few dollars, also the currency moved quite a bit in the wrong direction.
I was glad to have cashed in.
I should add that for us it was over the tax year end so it gave me better control of which year it appeared in.
I sold 99% of it at a 20 cents below the offer.
Then the renegotiated the deal and the offer price went down a few dollars, also the currency moved quite a bit in the wrong direction.
I was glad to have cashed in.
I should add that for us it was over the tax year end so it gave me better control of which year it appeared in.
It’s an interesting quandary.
I was in a similar situation - albeit the takeover did not proceed and my latest Sharesave hadn’t reached maturity so I couldn’t sell all of my shares anyway.
It’s hard to predict what the position will be post-takeover, but at 98% of offer price now that’s attractive. Personally, I’d probably hedge my bets and sell at least some.
Like another poster said, at worst you bank good profit now and can reinvest in a more diversified manner with a large amount of shares not in the same basket as your company/job prospects.
In my case, the deal fell through and the share price fell circa 15% and whilst they recovered they still haven’t reached that height since.
At the time, I read an interesting article analysing what tended to happen in real-life examples of company mergers & takeovers. Often the share price fell afterwards, as it was driven by optimism over potential opportunities, efficiencies and savings that may prove harder to actually achieve.
One interesting comment it made - and I’m not in any way financially savvy, so please take all of this with a pinch of salt - is that when a company offers to buy primarily with cash rather than shares it’s because they’re more confident in their own share price growing post-merger, whereas buying with a share offer indicated less confidence, because the risk there lies more so with the shareholders being taken over (i.e. share value falling after completion) having their shares acquired in return for potentially over-valued stock in the acquiring company.
Obviously a lot will depend upon the exact details of the companies and the proposed deal.
I was in a similar situation - albeit the takeover did not proceed and my latest Sharesave hadn’t reached maturity so I couldn’t sell all of my shares anyway.
It’s hard to predict what the position will be post-takeover, but at 98% of offer price now that’s attractive. Personally, I’d probably hedge my bets and sell at least some.
Like another poster said, at worst you bank good profit now and can reinvest in a more diversified manner with a large amount of shares not in the same basket as your company/job prospects.
In my case, the deal fell through and the share price fell circa 15% and whilst they recovered they still haven’t reached that height since.
At the time, I read an interesting article analysing what tended to happen in real-life examples of company mergers & takeovers. Often the share price fell afterwards, as it was driven by optimism over potential opportunities, efficiencies and savings that may prove harder to actually achieve.
One interesting comment it made - and I’m not in any way financially savvy, so please take all of this with a pinch of salt - is that when a company offers to buy primarily with cash rather than shares it’s because they’re more confident in their own share price growing post-merger, whereas buying with a share offer indicated less confidence, because the risk there lies more so with the shareholders being taken over (i.e. share value falling after completion) having their shares acquired in return for potentially over-valued stock in the acquiring company.
Obviously a lot will depend upon the exact details of the companies and the proposed deal.
Daaaveee said:
Thanks for the replies guys. We've been further informed on the acquisition, and what it means for share holders. I'll be keeping hold of all the shares I have until the deal happens. There is a risk of it falling through, but this does feel small enough for me to be comfortable with.
A helpful way to look at this is....if you didn't hold the shares, but did have the cash equivalent in your bank account, would you buy the shares with the cash?LeoSayer said:
A helpful way to look at this is....if you didn't hold the shares, but did have the cash equivalent in your bank account, would you buy the shares with the cash?
No... already over exposed as it is, too much risk. That does put a different perspective on it.I've just sold all tax free shares now, so de-risked as much as is sensible at this point. Any further sales would attract tax or lose matched shares.
However... more by luck than anything else, for some reason the share price just had a momentary spike above the offer price, and I managed to sell at this point! This raises even more questions!
Thank you to supersport and UnclePat for some great input too.
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