Elit acquisition sub group has sent me an offer to purchase my shares at $16.50 per share. The stock price is currently 16.62. Apparently a takeover has begun. What are my options? According to what they sent me they will acquire the shares from me eventually anyway. Should I just sell them now at the market price? Please advise.
You have what is known as a tender offer. Someone is offering to buy a specified number of shares at a specified price.It is your option to accept or decline the offer. If you accept, you will receive instruction to sign your certificates and mail them in (or give instructions to your broker if held in a broker account).If you tender your shares, you will pay no commissions and usually no fees, but it may take months to complete the deal and get your cash. Also if over subscribed they may take some of your shares and return the others.It is usually in your best interest to simply sell the shares at or near the offer price. This way you get your money for sure and quickly so you can reinvest it. The exceptions would be 1) to save on commissions, or 2) if you think a white knight might come forward to make a higher offer later.Yes, if the company is successfully acquired, they will probably make an effort to buy out minority shareholders. The law provides them some protection, but they can make life difficult by suspending dividends etc. Sometimes you can negotiate a better price to sell your shares, but I would not count on that. Getting more for your shares will probably require patience and negotiating skill.
Be careful of commissions/transfer fees that might be charged. My experience is that between what my broker and the acquiring company charges the fees are higher than a normal sell through your broker and the market. Since the current market price is higher than the tender offer I would be inclined to think that there might be a higher offer in the future or the tender offer will not be sucessful.Bob
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