Darktrace sale conversion

Hondadudepro

Good evening, you knowledgeable people on this forum. Long time lurker first post! 

Looking for some insight on takeovers when currency conversion occurs. I held some shares in Darktrace via a GIA with HL. They advise I have a choice of using their standard process plus fee or could choose the takeover company approach to conversion plus fee. No details that enable an informed choice to be made so feel a bit stuck. 

Anyone encountered this type of thing before? Presumably, could be others in a similar position. Appreciate will be volatility in any decision but can’t help think it is generally best to stick with existing broker/platform for the sale? 

All help and guidance is extremely appreciated. Keep up the good work!

Kind regards

cwep2

I have Darktrace shares with iWeb (same as Halifax/Lloyds share dealing). I have no options, they have said they will convert the USD and just give me GBP. Apologies I can't give you HL specific advice.

What is happening though is that the takeover will pay $7.75 per share, so you will get this amount x # of shares you hold. So as far as HL is concerned it will receive $$ on your behalf and so there are a few options of who converts that and what the costs/rate/fee will be. There is also an element of luck, they may do the FX conversion at different times / dates and the daily fluctuations are likely to be more than the difference in fees, but clearly you can't know the FX rate ahead of time, so just see which one is cheaper fees.

An alternative is just to sell them at market this week - I believe you can do this before close of trading on 27th September. This is definitely worth doing if the FX fees are more than the trading fees. Unsurprisingly the price of the stock has been pretty close to $7.75 converted > GBP for some time (so £5.70+a little bit and was higher when the FX rate was more favourable) and there will be people arbitraging this if the stock gets too cheap there is free money to be made, but expect it to trade a little lower than $7.75 in GBP terms as these arbitrageurs probably have to hold the trade for a couple of weeks and there are interest costs (carry) to factor in but this means it won't trade too much below this value. 

wmb194

I wouldn’t trust a broker like HL not to rip me off. Usually when companies organise the conversion you’ll receive close to the spot rate.

Hondadudepro

Thank you both for your reply and comments. 

The HL conversion fee will be 1% and their conversion to pound sterling will be upon receipt of the money at the prevailing conversion rate at the time. Plus I presume their usual transaction/dealing fee of £11.95.

The alternative is Luke Bidco, they will base it on an average of one or more business days between 30/9 - 15/10.  Plus any trading fees they impose but fail to disclose! Why so complicated and opaque. I would assume they would not be looking to maximise previous shareholder value so likely to want to clawback their outlay with high dealing fees. But that could be an unfair opinion?? 

Interesting point on selling beforehand. Still find it hard to distinguish best option. 

wmb194

Hondadudepro said:

Thank you both for your reply and comments. 

The HL conversion fee will be 1% and their conversion to pound sterling will be upon receipt of the money at the prevailing conversion rate at the time. Plus I presume their usual transaction/dealing fee of £11.95.

The alternative is Luke Bidco, they will base it on an average of one or more business days between 30/9 - 15/10.  Plus any trading fees they impose but fail to disclose! Why so complicated and opaque. I would assume they would not be looking to maximise previous shareholder value so likely to want to clawback their outlay with high dealing fees. But that could be an unfair opinion?? 

Interesting point on selling beforehand. Still find it hard to distinguish best option. 

You don't usually pay a dealing commission when receiving the proceeds of an acquisition. If you don't sell, I'd roll the dice with the Luke Bidco option. These days FX dealing fees shouldn't be anywhere near 1%.

poseidon1

Hondadudepro said:

Thank you both for your reply and comments. 

The HL conversion fee will be 1% and their conversion to pound sterling will be upon receipt of the money at the prevailing conversion rate at the time. Plus I presume their usual transaction/dealing fee of £11.95.

The alternative is Luke Bidco, they will base it on an average of one or more business days between 30/9 - 15/10.  Plus any trading fees they impose but fail to disclose! Why so complicated and opaque. I would assume they would not be looking to maximise previous shareholder value so likely to want to clawback their outlay with high dealing fees. But that could be an unfair opinion?? 

Interesting point on selling beforehand. Still find it hard to distinguish best option. 

A bit too late jump ship now, but if you had been with Interactive Investors you could have received your proceeds in dollars, hold the dollars earning interest going forward and convert back to sterling ( subject to commision)  at your convenience. Alternatively, reinvest your dollars in a dollar denominated stock or etf to provide a bit of currency diversification.

Hondadudepro

Great insight and information as always. Thanks all for your contributions. 

I am quite new to this world and clearly have a lot to learn! 

Kind regards