Author Topic: Own stock in company being bought out... new company wants to buy my shares?  (Read 2972 times)

jeromedawg

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Hey guys,

So I have a handful of shares of Netsuite from a while back. They were recently bought out by Oracle though and I have and "offer to purchase all outstanding shares of common stock of Netsuite at $109 per share" - do I have any other option like to not sell? And if I opt out of selling, will the stock just be converted to shares of Oracle? Is it better to just let them buy my shares? I'll be making a bit of money off it if I did... of course, if that's my only option then I guess there's no choice haha.

shipskin

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The Oracle deal to buy out Netsuite was for $9.3 billion (all cash). They agreed to pay $109/share for all shares of Netsuite, which explains why today Netsuite is currently trading at $108.95/share. As the deal comes closer to completion, the stock will eventually creep up to the agreed upon $109. The reason it isn't trading at that price now is because of the unlikely case of the deal not going through.

You can either sell now or wait for Oracle to purchase your shares. If you wait, the shares should disappear from your account on the date of the deal closing, and be replaced with cash. If the transaction were in cash and stock, you would see the proportionate amount of cash and Oracle stock show up in your account, as stated in the deal terms.

If the shares are in a taxable account, you will have to pay long-term/short-term capital gains tax on the shares ($109 - your basis) depending on how long you have held the shares. <= 1 year is short term cap gains | > 1 year is long term cap gains. If these are held in a retirement account, the cap gains will not be treated as a taxable event.

That's about it.

Proud Foot

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Does the offer say anything about stock conversion?  I haven't looked at the filings but all the articles I have read make it seem like this is a cash only purchase.  The only way this does not go through is if enough shareholders do not accept the tender offer.  I don't think it is likely as the $109 is a nice jump over where it has traded for most of the year. I would do it, make the money and reinvest it.

jeromedawg

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Does the offer say anything about stock conversion?  I haven't looked at the filings but all the articles I have read make it seem like this is a cash only purchase.  The only way this does not go through is if enough shareholders do not accept the tender offer.  I don't think it is likely as the $109 is a nice jump over where it has traded for most of the year. I would do it, make the money and reinvest it.

I don't think there would be any conversion just from skimming through the doc. I have the stock in Scottrade and they emailed me saying I need to contact them to "approve" or "accept" the offer terms by Sept 15th or around there etc. I'm just wondering what will happen if I don't do that or forget...

bacchi

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Does the offer say anything about stock conversion?  I haven't looked at the filings but all the articles I have read make it seem like this is a cash only purchase.  The only way this does not go through is if enough shareholders do not accept the tender offer.  I don't think it is likely as the $109 is a nice jump over where it has traded for most of the year. I would do it, make the money and reinvest it.

I don't think there would be any conversion just from skimming through the doc. I have the stock in Scottrade and they emailed me saying I need to contact them to "approve" or "accept" the offer terms by Sept 15th or around there etc. I'm just wondering what will happen if I don't do that or forget...

It's a majority vote. If you don't vote, and >50% vote for it, your shares will be sold in the tender offer.

jeromedawg

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Does the offer say anything about stock conversion?  I haven't looked at the filings but all the articles I have read make it seem like this is a cash only purchase.  The only way this does not go through is if enough shareholders do not accept the tender offer.  I don't think it is likely as the $109 is a nice jump over where it has traded for most of the year. I would do it, make the money and reinvest it.

I don't think there would be any conversion just from skimming through the doc. I have the stock in Scottrade and they emailed me saying I need to contact them to "approve" or "accept" the offer terms by Sept 15th or around there etc. I'm just wondering what will happen if I don't do that or forget...

It's a majority vote. If you don't vote, and >50% vote for it, your shares will be sold in the tender offer.

Thanks. I just called to clarify with my local Scottrade branch. They more or less said the same - if I wait until the expiry date, the shares will be sold via the tender offer and there will be a $25 tender offer fee charged as well. If I sell now or before the expiration though, I'll just be charged the $7 trading fee and accept whatever price [likely under $109]. Sounds like I should just sell the stock now then...

On a sidenote: the Scottrade rep started going off asking about my investment goals and what I want to accomplish. He seemed somewhat aggressive about trying to find out what I want to do but I cut him off and told him now is not a good time to talk. It started feeling a bit salesy like he was going to get into trying to sell me tools or something - I'm not as familiar with stock brokerage associates but I'm assuming they have to make their money somehow, and there are avenues by which they make their commission... it's not clear to me what those are though - could someone enlighten me?

MoonLiteNite

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On a sidenote: the Scottrade rep started going off asking about my investment goals and what I want to accomplish. He seemed somewhat aggressive about trying to find out what I want to do but I cut him off and told him now is not a good time to talk. It started feeling a bit salesy like he was going to get into trying to sell me tools or something - I'm not as familiar with stock brokerage associates but I'm assuming they have to make their money somehow, and there are avenues by which they make their commission... it's not clear to me what those are though - could someone enlighten me?

I think that is normal. The few times i have called etrade for my personal account they ask that.
And last week i had to call UBS for a ESPP trade issue, and they went off on my goals and if i had any questions.
AND last week i also had to call fidelity (for 401k) to request some personal info that wasn't on the site. And she started asking about my goals and if i needed any help with deciding what to invest in.

I think it is just what studies finds actually helps make sales and customer happier

edit: I don't think they make any commisions, but it MAY be in their review of how many people they "helped" extra after the main point of the call.

bacchi

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On a sidenote: the Scottrade rep started going off asking about my investment goals and what I want to accomplish. He seemed somewhat aggressive about trying to find out what I want to do but I cut him off and told him now is not a good time to talk. It started feeling a bit salesy like he was going to get into trying to sell me tools or something - I'm not as familiar with stock brokerage associates but I'm assuming they have to make their money somehow, and there are avenues by which they make their commission... it's not clear to me what those are though - could someone enlighten me?

That happened to me earlier this year.

I was selling off VTI to build up cash for a construction project and I received a call from Scottrade a few days after the sale asking if I was "scared" of the market. I assume they wanted to sell some bonds but it came across as smarmy and condescending.

jeromedawg

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I ended up placing a limit order at 108.95 and it hit that point and sold earlier today. I was a bit surprised as I didn't think it would get that high again but it looks like that's the current high point of the day. I'll take it at that too, versus the $25 tender offer fee. I had 20 shares so this transaction only ended up costing me $8 in relation to the tender offer. Glad I have it off my hands too, as I've been looking for opportunities to sell off my stocks.

TheAnonOne

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I ended up placing a limit order at 108.95 and it hit that point and sold earlier today. I was a bit surprised as I didn't think it would get that high again but it looks like that's the current high point of the day. I'll take it at that too, versus the $25 tender offer fee. I had 20 shares so this transaction only ended up costing me $8 in relation to the tender offer. Glad I have it off my hands too, as I've been looking for opportunities to sell off my stocks.

Given that the 109 is basically "locked in" more or less, you had no reason to keep it until the 'date'.

Now you can put it in something that has potential to grow in the meantime (and beyond)

jeromedawg

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I ended up placing a limit order at 108.95 and it hit that point and sold earlier today. I was a bit surprised as I didn't think it would get that high again but it looks like that's the current high point of the day. I'll take it at that too, versus the $25 tender offer fee. I had 20 shares so this transaction only ended up costing me $8 in relation to the tender offer. Glad I have it off my hands too, as I've been looking for opportunities to sell off my stocks.

Given that the 109 is basically "locked in" more or less, you had no reason to keep it until the 'date'.

Now you can put it in something that has potential to grow in the meantime (and beyond)

For sure... selling it for 5 cents under is nominal in the big picture too.