Daft Q about shares.

[chris_w666]

If a Lloyds take over HBOS and pay £2 or £3 or whatever per share, do those holding shares have to sell? Or do their shares get transfered to the new company?

If they need to sell then surely Lloyds asset value will rise and their shares will go up. Or will that company taking more risk cause them to fall?

If they tranfer to the new company will those holding shares and not selling be able to win in the long run.

[walm]

chris_w666 said:

If a Lloyds take over HBOS and pay £2 or £3 or whatever per share, do those holding shares have to sell? Or do their shares get transfered to the new company?

Something like this:
Lloyds give a 90 day offer period at say £3 when you can sell them your shares.
That can be extended.
As soon as it reaches IIRC 95% of shares out the remaining 5% will be forced to sell, called a "squeeze out".

chris_w666 said:

If they need to sell then surely Lloyds asset value will rise and their shares will go up. Or will that company taking more risk cause them to fall?

Lloyds are buying HBOS for say £15bn.
They have a number of potential ways of buying HBOS but most often cash or paper, meaning cash to HBOS shareholders or giving HBOS shareholders Lloyds shares.
Cash is the easiest to understand.
Lloyds have say £15bn in cash and exchange that for HBOS.
If the market believes that Lloyds are over paying and HBOS is really only worth £10bn then Lloyds share price will fall accordingly and vice versa.
(You can't just compare market caps and say obviously Lloyds are overpaying since HBOS mkt cap is only £9bn since Lloyds will be able to add value through synergies etc...)

chris_w666 said:

If they tranfer to the new company will those holding shares and not selling be able to win in the long run.

Holders often don't sell initially because they think the acquirer will offer more.
Once the offer has been accepted and recommended by the target's board however, you might as well sell since chances are eventually Lloyds will have 95% and be able to force you to sell. And by then you probably have better things to do with the money.

All IIRC etc...

[Zod]

unless they do a scheme of arrangement, in which case, assuming 75% vote for it, your shares will be exchanged for you.

Edited by Zod on Wednesday 17th September 15:52