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Investing Question- What happens when i company is bought?

Discussion in 'Ferrari Discussion (not model specific)' started by TimN88, Feb 23, 2004.

  1. TimN88

    TimN88 F1 Veteran

    Jun 12, 2001
    5,032
    Northeast
    Full Name:
    Tim
    I own alot of shares of AT&T Wireless. Cingular just bought AWE for 41 billion dollars (11B more than there original $30 billion bid) , which equals $15 a share that they will be paying. Last week when the $41B bid was made public after the bidding deadline, stock prices jumped to over $14 a share, and have since steadily fell to a bit more than $13.50.
    My question is what happens to my shares of AWE, does the name get changed to something else? Also, will the sotck price ever go up to $15 because that is what cingular is paying for them, or do they not buy common shares that investors like me could sell? Is it more likely that it will keep going down instead? Ive already done pretty well on this one in the past 4 weeks (i bought when the sale of AWE was only a rumor).

    Thanks in advance. I do not know much about what happens to a company in this situation.
     
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  3. TimN88

    TimN88 F1 Veteran

    Jun 12, 2001
    5,032
    Northeast
    Full Name:
    Tim
    i forgot where i was for a minute. I meant to post this in O/T. sorry.
     
  4. Ashman

    Ashman Two Time F1 World Champ
    Silver Subscribed Owner

    Sep 5, 2002
    28,592
    MA
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    John
    The Cingular deal is an all cash offer of $15.00/share. The only variables now are whether the deal will receive regulatory approval (Highly likely, as they have already assessed the assets that will need to be sold to receive approval) and when the deal will close.

    The discount of today's price from the deal price reflects the (i.) interest on the money between now and when the deal closes and (ii.) the risk that the deal may not close at all because of regulatory constraints.

    When it does happen, you (or your broker) will be asked to tender your shares to an exchange agent, who will give you your $15/share. After that point, you no longer own AWE and are free to invest your money (leaving aside some for capital gains taxes of course) wherever you like.

    Not a bad run-up in the past few months. I wish that I owned more than a few hundred shares!

    John
     
  5. TimN88

    TimN88 F1 Veteran

    Jun 12, 2001
    5,032
    Northeast
    Full Name:
    Tim
    Not bad? It more than doubled! I bought when it was a bit over $10 a share a few weeks ago.
     

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