ADP

Hi all

Quick question about shares for those who know about this.

If I buy shares in a company and then this company is taken over what will happen to the shares or the share price??

I guess an example is Morrisons being taken over by Tesco.

thanks


Andy

boxst

Hello

Your shares get converted into shares of takeover company at the agreed share price.

Steve.

south-star

Usually they go up as the demand for the shares increases.
If you buy shares using information that is not available to the public that is insider trading btw.

merkin

Firstly: Please tell me what you know, cos as far as i know there isn't a hope in hell of Tescos taking Morrisons out

Secondly: It very much depends on the stock, a lot of stocks that get taken over have most of it priced in now, as often its speculated on for months before. Typically in these situations, the stock will only rise by 5-10% on announcememnt of the takeover.

If its a complete surprise, 30-40% premiums are reasonably common

sometimes the target companys shares will even decline, as the hoped for bid price is lower than the actual bid price

In short theres no easy answer, as it entirely depends on the situation, i've seen zero premium mergers lots of times before.




[Edited by merkin - 5/21/2003 2:01:31 PM]

TelBoy

In short - the share price could go anywhere, depending on the factors outlined above.

But as to what happens to the shares themselves - your capital will be safe, just denominated in a different company name. You won't "lose" your investment, except in terms of price fluctuation, from a takeover.

ADP

Ok thanks

Well I dont work for either, and yes I am aware of insider trading rules - its nothing to do with Tesco or Morrisons.

Im just curios because the company Im working for is likely to be overtaken soon and I wanna know whats gonna happen to my shares. Like a mug I bought them on flotation, they promptly fell from something like 170p to now, 10p ish.

merkin

In that case, take a look at what they've done over the last few weeks, have they come from lower than 10p?

If not, the chances are a takeover if it comes will increase the value by a reasonable amount. If the company is in a bit of crap, and has a lot of debt, then it could be done at the current price.

ADP

there problem seems to be that they just dont make any money, though the share price has been as low as 6p, and has risen recently(well over last month or so)

TelBoy

Which company is that ADP?

ADP

erm Im not sure whether I should say? I dont mind telling Im just not sure whether the news is "common knowledge"

Andy

ADP

Ok so someone tell me what this means


Additional Listing

Applications have been made to the UK Listing Authority and the London Stock Exchange for admission to (1) the Official List and (2) trading on the London Stock Exchange's markets for listed securities in respect of 215,000 ordinary shares of 1p each ("New Ordinary Shares"), which were issued pursuant to the Group’s 2000 Long Term Incentive Plan.

The New Ordinary Shares, which will rank parri passu in all respects with the existing ordinary shares in issue, are being issued to the ****************** Employee Benefit Trust.

It is expected that admission will become effective, and that dealings in these shares will commence, on 27 May 2003.



END

TelBoy

I'll almost guarantee Andy, with the greatest respect, that if you know about it, plenty of other people have heard the rumour - people make a living from finding this stuff out! The fact that the share price has appreciated 40% recently shows that someone, somewhere knows what's going on. And with the name, we can hopefully advise you whether it's worth piling in...

merkin

ADP, That means the directors have been wedged up with new shares in laymans terms.

ADP

mail me and Ill tell you, though like you say, everyone probably knows I dont want to go publically on the record

Diesel

I'm in the same position with Selfrdges shares. I paid 348p for them about 12m ago and the takeover are offering 387p. I hardly call that an incentive! 3 options offered in the letter -

Accept cash offer
Loan Note alternative (which I do not understand as it is in code!)
Take no action.

I guess if I 'take no action' it all goes ahead anyway at the miserly premium?

D

ADP

thats only 3 p a share, unless you have millions, or are desperate for the cash Id probably sit tight

TelBoy

Diesel, you're complaining about an 11.2% return in the current climate?

Wow, some people are hard to please!

TelBoy

Did i mis-read it? My computer says 348p vs 387p...

merkin

Diesel, hang on to them, theres speculation that Robert Tchenguiz is going to make a counter bid (although personally i dont believe this seeing as his dad is under investigation for trading in selfridges before the bid was made).

so Vote yes, If the counter bid comes in, you wont be held to tendering to the current offer.

ADP

yhm TelBoy

fast bloke

that letter means that they are issuing 215000 new shares. As they are 1p each this is probably not designed to raise capital , so they could be used to give to employees as a sweetener... thus the mention of 'Long Term Incentive Plan'

Diesel

Tel - well yes 11% return sounds good (at least I have one share that hasnt made a loss!). Thing is I should have bought thousands of them and not a few hundred! I'll barely make £200 hence not jumping up for joy The offer remains only a few pence over current market value - I would like more please Mr Billionaire

D

TelBoy

LOL! If you find a lump of Hindsight on your travels, can i have some please??

merkin

You can't look at where the offer is relative to the stock now, the only reason the stock is where it is now is people like me!

Look at where the offer is relative to where it was before the bid spec crept in, i.e. 2.50

Diesel

Yes! I'm learning! Thanks Merk & Tel. I'll stop hi-jacking now!

ChrisB

Talking of shares, are the ones in Mutual.Net still being traded on AIM or somewhere?