General advice - company acquisition

Cabbagetower

A company I hold shares in has been acquired and the acquiree has offered to buy back my shares. If I don't sell them back, then they will rollover to the acquirer. 

I'm wondering what factors should I take into consideration when making a decision either way?

Thank you. 

wmb194

Cabbagetower said:

A company I hold shares in has been acquired and the acquiree has offered to buy back my shares. If I don't sell them back, then they will rollover to the acquirer. 

I'm wondering what factors should I take into consideration when making a decision either way?

Thank you. 

What do you mean when you write, "they will rollover to the acquirer"?

Hoenir

Public or private company? 

Cabbagetower

 As an alternative to the Cash Offer, eligible xx Shareholders may elect to receive Rollover Shares in respect of their entire holding of xx Shares (subject to any "scale-back" as a result of the Alternative Offer Maximum, defined below) at the Scheme Record.

The company is currently publicly listed but when acquired the rollover shares will not be listed on any stock exchange. 

wmb194

Cabbagetower said:

 As an alternative to the Cash Offer, eligible xx Shareholders may elect to receive Rollover Shares in respect of their entire holding of xx Shares (subject to any "scale-back" as a result of the Alternative Offer Maximum, defined below) at the Scheme Record.

The company is currently publicly listed but when acquired the rollover shares will not be listed on any stock exchange. 

Which company? FD Technologies? Personally I'd avoid owning unlisted shares.

https://www.londonstockexchange.com/news-article/market-news/recommended-acquisition-of-fd-technologies-plc/17025247

https://www.londonstockexchange.com/news-article/FDP/conditions-satisfied-and-timetable/17115947

https://www.londonstockexchange.com/stock/FDP/fd-technologies-public-limited-company/company-page

Cabbagetower

Yes that's correct. 

May I ask why you would avoid it? 

wmb194

Cabbagetower said:

Yes that's correct. 

May I ask why you would avoid it? 

Because if you decide to sell it's likely you won't be able to. With unlisted shares you also don't have a market price to compare any offer to so even if you can sell you might not be able to judge the value very well.  

Being a minority shareholder in an unlisted company doesn't usually come with the same protections as with listed companies and in this case, depending on the take-up of this rollover offer, IIRC the PE company will own at least 73% of the company so it'll call the shots.

I'd take the money and invest in something else. I don't know whether there are other, similar listed companies.

One reason you might take the rollover is because you don't want to crystallise a capital gain. (Check that it doesn't anyway.)

Cabbagetower

Thanks for that explantation. If I sold the major consideration is the CGT, because I was an early investor it will be considerable. 

Keep_pedalling

Cabbagetower said:

Thanks for that explantation. If I sold the major consideration is the CGT, because I was an early investor it will be considerable. 

I would still take the profit and run. A real profit less tax is a better bet than very high risk unlisted shares which could end up loosing you not only your gain but your original investment as well. 

masonic

Add to that even if you were to take the unlisted shares, you could end up facing a compulsory purchase down the line, perhaps in an even less favourable tax regime. Very unlikely you'd be able to dispose of them in tranches over several tax years.

Hoenir

Cabbagetower said:

Thanks for that explantation. If I sold the major consideration is the CGT, because I was an early investor it will be considerable. 

You would be left with shares that at best could only be traded on a matched bargain basis. Highly illiquid with other majority shareholders happy to bide their time before picking the rollover shares off.