Andrew asked in Business & FinanceInvesting · 2 months ago

How does companies merging stocks work? ?

I'm new to the stock market and my company I work for was bought out. They state that for every stock I own of my employer, I get .4 of theirs(company that just bought us) . So basically my question is do I have to hold my stocks for so long to get that .4 of a share, or can I swing trade infinitely to basically add some protection to my investment. Thank you in advance. 

3 Answers

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  • DEBS
    Lv 7
    2 months ago
    Favorite Answer

    If your stocks were bought on the open market, not through some company purchasing plan or grants, then you could still sell at any time. If your stock holdings are from a company purchasing plan or grants, then you'll need to talk with your company as to what possible restrictions they put in place around this. Often you have to wait a certain amount of time to sell and/or can only sell in certain windows.

    • Andrew2 months agoReport

      Thank you for that answer. It will be on the open market. 3 shares of my employer, would equate to receiving 77% match as of now if that makes sense. Just couldn't find any info as to how long of a hold. 

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  • 2 months ago

    OK I've been at this since 1982, and I work with Corporate Actions (which includes mergers) and I don't know what you mean by "swing trade to basically add some protection to my investment."  Whatever your thinking of doing it sounds like it won't do whatever you think it will achieve.  Your going to swap 1 share of your employer's stock for 0.400 shares of the acquiring company's stock.  This is called a stock merger.  Most of the time if you are to receive a fraction of a share, (example you own 8 shares of your company stock and would be due 3.200 shares of the new company) you will shortly after the merger receive a cash payment for the fractional shares.  This is called a Cash in Lieu payment (CIL).   

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  • Eva
    Lv 7
    2 months ago

    The new company is exchanging shares of their stock for the shares you own in the old company. Once that's done you no longer own shares of the old company, so there would be nothing to trade. If you sell your shares in the old company before the date the exchange is to take place you will not receive any shares in the new company.

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