Share save scheme in the event of a takeover.

sean555

I have been saving for 4 years in my Employers share save scheme and in March 2008 I will be able to exercise my right to purchase shares whose current price is over double the option price.

The company is currently the subject of a number of takeover rumours and I was wondering what the rules were regarding the shares reserved for employees to purchase. Will we be given the option to exercise our purchase rights in order to sell if there was a compulsory purchase of the shares in a takeover?

Hope someone can enlighten me.

Redbedhead

Often you will be offered a cash alternative to the shares in these instances. Or even be allowed to exercise and then take what is being offered for the company (either cash or cash and a share for share exchange).

It will depend on the specific terms of the scheme.

owner

This happened to me once, we just got our money back.

sean555

owner wrote: »

This happened to me once, we just got our money back.

Guess i better hope that a full takeover does not happen then. I have been looking forward to a tidy profit and would really regret not taking the 3 year option where i would have already have recieved the shares.

Thanks for taking the time to answer guys.

DRS1

I suspect owner only got his money back because the takeover was at a price below the exercise price of the option and so he would have made a loss otherwise.

You say the share price has gone up and is about double the exercise price. If there is a takeover offer you might hope that the offer price will be above the share price and so you may well be looking at a good gain.

As others have said you may be offered the chance to exercise and accept the offer or to take cash to cancel the option or perhaps even a rollover so that your option becomes an option over shares in the bidder and you can keep saving until it matures next year.

what will actually happen will depend on the circumstances of the offer. I'd just be patient and wait to see what happens.