Anyone have a take on what is going to happen regarding this takeover announced today? What is the best strategy for current stockholders.
You might as well hold your shares for a little while to make sure another competing offer doesn't come out of the blue. Since the LQI board unanimously approved the deal, the likelihood of a competing offer is not great, but it's always possible.After that time frame, then I think a primary factor of whether you hold or sell will be your holding period. The deal is supposed to close in first quarter 2006. If you will establish a one year holding period by then, thus ensuring favorable long term capital gain treatment, then your best bet will likely be to hold until you establish your one year holding period. If you've already got your year established, or if you bought more recently so it's highly likely the deal will close prior to your one year being established, then you can watch the market price. If the market price is near the buyout price, you may want to go ahead and sell to lock in your profits and reinvest the cash elsewhere.The primary risk of holding is that the deal falls through. I think under the circumstances, that's unlikely. However, we've seen this week what happened to the Guidant buyout by JNJ, in which JNJ pulled out of the deal, citing material adverse changes. Another interesting buyout was announced this week of LNT, at a premium. However, the market price of LNT is still well below the buyout price, reflecting the fact that the buyout is contingent on LNT meeting certain financial conditions, which may be tough to meet, thus increasing the possibility the deal won't go through. I saw nothing like that in the announcement of the LQI buyout, but we'll need to see what the actual deal is before we can tell whether there are any substantial hurdles that must be overcome before the deal can close.Raleigh1208
I'm going to hold on to my LQI shares.Yesterdays closing price is still a good 3% under Blackstones offering price. A 3% gain over the next 6 months in this market is a good play. Even if the deal falls through, LQI is my favorite long term dividend play. Any thoughts?
I think we should hold long enough to see if a competing offers comes, which is not likely. Also if you can hold long enough to get a year holding period, then you'll have favorable tax treatment on the gain. Also if you hold until next year, you defer the tax into next year. The closer we get to a deal closing, the closer the market price will come to the buyout price.Raleigh1208
johnnyb223 posts:"I'm going to hold on to my LQI shares.Yesterdays closing price is still a good 3% under Blackstones offering price. A 3% gain over the next 6 months in this market is a good play. Even if the deal falls through, LQI is my favorite long term dividend play. Any thoughts?" Well here's an opposing view. I sold my shares on the day the deal was announced. As others have noted, it's unlikely another suitor is waiting in the wings to sweeten the deal. Given that the company taking them over is private, there's simply no option to hang on for future dividends. I say take the money and run. There seem to be no lack of opportunities to better than the 3% difference between share price now and share price at the close of the deal.Just one old dude's opinion, of course. And, in case your interested, I put my proceeds into Annaly Mortgage REIT (the La Quinta shares were in my IRA) which has been beat into the dust on the yield curve pressure. I believe the Feds are near an end to the rate increases, the long term rates are already moving up and NLY will do just fine in a quarter or two. Many will be sad to have missed the near 11 buck stub then.-- Dale in Woodville
I put my proceeds into Annaly Mortgage REITSame here, for same reasons.Rgds,HH
Please read the boards and Matthew's comments of late, because there is risk here, but I think the biggest value in current recs is American Financial Realty ( AFR ).Louis
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