Shares advice - "going private"

eits1000

I'd really really appreciate some advice here. I made a terrible mistake buying Moss Bros shares a couple years ago that since tanked really badly. They are now about to be taken over by a clothing company and all the articles say they are going to be "taken private".

I have no clue what that means. Will my shares be rendered worthless after the acquisition? Should I quickly sell now? Or will I be a shareholder in the new company if I hold on? 

Many thanks for your help! 

MaxiRobriguez

Your shares will be purchased from you at a set price (typically higher than what you would sell on the public market) assuming the party taking over is purchasing (almost) all of the shares.

Afraid there's not a lot you can do about it. I'm in a similar position with a tech firm. 

eits1000

MaxiRobriguez said:

Your shares will be purchased from you at a set price (typically higher than what you would sell on the public market) assuming the party taking over is purchasing (almost) all of the shares.

Afraid there's not a lot you can do about it. I'm in a similar position with a tech firm. 

Thanks for the reply, I still don't get it. The new company has said it will buy the company at 22p per share. Once sale goes through will I lose everything? The share price today is 22p weirdly, shall I just sell? 

MaxiRobriguez

eits1000 said:

MaxiRobriguez said:

Your shares will be purchased from you at a set price (typically higher than what you would sell on the public market) assuming the party taking over is purchasing (almost) all of the shares.

Afraid there's not a lot you can do about it. I'm in a similar position with a tech firm. 

Thanks for the reply, I still don't get it. The new company has said it will buy the company at 22p per share. Once sale goes through will I lose everything? The share price today is 22p weirdly, shall I just sell? 

You wouldn't lose 'everything' - your shares would be purchased for 22p - you'd receive that money. Obviously that's a lower price than you paid for it but the other side of the coin is that if the Moss Bro's management think it's a reasonable offer then it's probably in your interest to accept (because they know the business better than you and in that scenario they're saying it's better than rejecting). 

I wouldn't sell. It's not guaranteed that the takeover happens, and there may be alternative bidders that come in that bid up the price. Wait it out, see what happens. 

eits1000

Is there any chance the current share price goes higher than 22p in the meantime and I can then sell? The sale is def going through as the buyer already tried to pull out but it was ruled unlawful and they must proceed. So what you are saying is, if I do nothing I'll get paid out at 22p a share?

MaxiRobriguez

eits1000 said:

Is there any chance the current share price goes higher than 22p in the meantime and I can then sell? The sale is def going through as the buyer already tried to pull out but it was ruled unlawful and they must proceed. So what you are saying is, if I do nothing I'll get paid out at 22p a share?

In short, yes, you'll get 22p, and no - it won't go higher in the mean time. You can check the share price charts on google this morning, it's been locked on 22p since 08:05 which is presumably when the final announcement of the takeover was confirmed?

Linton

eits1000 said:

Is there any chance the current share price goes higher than 22p in the meantime and I can then sell? The sale is def going through as the buyer already tried to pull out but it was ruled unlawful and they must proceed. So what you are saying is, if I do nothing I'll get paid out at 22p a share?

Very unlikely that the price would go higher than the current offer  -  why would anyone buy a share for 23p when they know they will have to sell at 22p?

eits1000

They are on 22p today, I may as well sell now then as I won't ever get anything over that? 

ColdIron

Will you incur a transaction fee if you sell them yourself now?

eits1000

I'd be charged Like £10

bowlhead99

eits1000 said:

I'd be charged Like £10

So, you could sell on the market for 22p ish, and pay the costs of selling, or you could accept the offer for your shares to be purchased for 22p in which case your broker will receive those proceeds and give them to you.

As you mentioned, as they made a binding offer they would generally need to go through with it, even though they don't want it any more at that price post-covid. Their purchase could fail if they went bankrupt themselves. It is unlikely anyone else is going to step in and bid more than 22p for the company as a rival bid. If you can spare the tenner for fees and are nervous that the deal won't go through leaving you with shares worth even less than 22p, you might as well take it.  But if the selling cost is a large proportion of the value of the shares (e.g. the 22p  offer is worth £50 and you would only get £40 if you had to pay a £10 selling cost), you might prefer to just leave it.