What happens to a companies stock after they r bought?

[AgentCreed]

Just reading on past sales and merges of companies, wanted to know what happens to a companies stock after they are bought by another company? if u owned the stock b4 the buy does it increase in value or bottom out? is it folded into the new company and u are now a shareholder in that company? or do u just get a goodbye check if the newly bought stock is worth less in comparison to the new buyers stock??

 

[Mad Boma]

Depends on the agreement but you usually keep your stock.

In a merger you get a "new" stock of the newly formed company (they'll value what your company brought to the table 1 share of company x stock will get you 3/5 of newly formed company y stock)

In a buyout (essentially same principle) you get a share of the buying company usually at a worse ratio than a merger. (Your company got bought you might get .5 shares for every share or even less.) Your company did the buying nothing changes but at the end of the day your stock will gain more value (if everything works out)...

Sometimes in a buyout you just get a check for an agreed upon price. Usually doesn't happen because the buyer has to come up with a shitload of cash. (Price agreed by the board of directors and then sent out for a vote amongst the share holders. Every share has a vote, so the more shares you have the more your voice counts. Majority wins so whatever is agreed you get a check.)

 

[AgentCreed]

Thanks for the info