What company is GASCO?

What happens to shareholders if another company buys up their company?

• Company A buys Company B for a few billion dollars in cash. What happens to all the shareholders in company B if all of the outstanding shares are purchased by Company A? Lets say the current price per share of Company B is $20. Company A will acquire Company B at a common stock price of $50. So what happens to company B investors? Also, since Company A made to $50 purchase does it neccessarily mean the stock of Company B will now skyrocket to nearly $50 and if it does do the company B shareholders profit or not because of the all outstanding shares buyout?

• Answer:

  The shareholders of the company being acquired will sell their shares to the acquiring company, assuming it is an all-cash deal. In the example you gave, each person who owned stock in Company B would get $50 for each share he owned. Much of the time it is not an all-cash deal. Sometimes it is an all-stock deal, in which case some ratio is determined for exchange the shares. For example, if the ratio was 0.792 and I owned 100 shares of Company B, I would receive 79 shares of Company A stock plus cash in lieu of the partial share. Sometimes the deal is a combination of stock and cash. For example, when United Healthcare acquired Oxford Health Plan I received 0.6357 of a share of UNH Common Stock plus $16.17 cash for each share of OHP I owned.