Benzinga does not provide investment advice. Snapchat, Apple And Twitter Understand The Hidden Value Of 'Shareable Design'Īnalyst: Hewlett Packard Enterprise Has 'Zero Chance Of Remaining Relevant'Īre U.S. Visit for more awesome educational content! The LinkedIn buyout officially closed this week after regulatory approval from the European Union. Of course, many deals include a combination of cash and stock as well.įor LinkedIn shareholders, the Microsoft deal was an all-cash acquisition, meaning shareholders received $196 cash for each share of LinkedIn they held. It’s important to note that the ratio of old shares to new shares is rarely one-to-one. Even a whispered rumor of a merger can trigger volatility that can be profitable for investors, who often buy stocks based on the expectation of a takeover. If it is an all-stock deal, the shares will be replaced by shares of the company doing the buying. LinkedIn was ultimately bought by Microsoftfor 26. Stock prices of potential target companies tend to rise well before a merger or acquisition has officially been announced. If the buyout is an all-cash deal, shares of your stock will disappear from your portfolio at some point following the deal's official closing date and be replaced by the cash value of the shares specified in the buyout. What happens next depends on the terms of the buyout. Once a deal has been announced, shareholders must vote to approve the deal, and regulators must clear the deal. However, long-term investors may wonder what happens to a stock that is bought out if they don’t actually sell the shares.įirst, it may take quite a while for anything to happen at all. For traders looking for a quick buck, the time right after the buyout announcement is usually a good opportunity to cash out. For example, LinkedIn Corp (NYSE: LNKD) shares spiked nearly 50 percent when Microsoft Corporation (NASDAQ: MSFT) announced a takeover earlier this year.
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