Hi,I own a small amount of Rite Aid RAD stock. I still have a lot to learn and have been investing for about three years. Yesterday, there was a 40% increase in RAD stock price due to announcement that it was being purchased by Walgreens.What can I expect- nothing is certain I know- if the deal goes through? Will my RAD stock stay about the same, increase more due to the buy- out, move in step with Walgreen stock price, does RAD stock disappear from being publicly traded?Excuse my lack of knowledge. I searched but could not find an answer, so they say the only stupid question is one you do not ask.Thanks
I'm sorry no one has answered you quicker.Yes Walgreens was rumored during the day to be buying Rite Aid, and after the close it appeared even more certain that a strong offer is on the table. 9.41B ?? I don't have either stock but I pay attention.A buyout offer can come in either all cash or stock and cash or just stock and I don't know which it is for this deal.The rumors yesterday put the deal at or over $10B so RAD might actually fall some today now that the deal is better defined.This is a big deal within the pharmacy industry and the DOJ may hold it up over whether or not too much consolidation is bad for the country, so if the spread is bigger than a couple of percent, it may be because people think the deal will get called off, which puts more risk on the time between now and closing.What it means for you:I hope the RAD jump was profitable for you!Usually once the deal is pretty well understood, RAD would trade up to a few % below the deal price per share and the gap will narrow as the closing approaches. It's pretty normal to sell the stock now and let someone else follow along for months longer for the last couple of percentage points on a deal.Last thing: taxes. If you are investing through a taxable account you need to consider the holding period; if holding through the closing date will bring you into the long-term capital gains tax rate then you need to consider that aspect as well.-Another Rob
I noticed that mostly when the company is being bought out and the deal makers are figuring out their offer to shareholders they use average price of the stock before the jump caused by the news, so I would consider selling your shares while the price is high if it's not too late. If you prefer to hold on to them you will be offered new stocks, the money or a combination of both.
If the deal is stock for stock it is typically done without it being a taxable event. If the deal is $ for stock there would be a capital gain or loss involved.
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |