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Show Answers to frequently asttecU questions about stock ownership , : By PAM NICHOLS Financial Consultant Shears on Lehman Hutton . Corporate mergers and acquisitions acquisi-tions are a very visible and exciting part of today's investment scene. However, these often are high risk-deals risk-deals and that can present a - bewildering range of options to individual in-dividual investors who own stock in the companies involved. - This column addresses four frequently fre-quently asked questions about stock . ownership in companies involved in mergers and acquisitions. " Q. If I Own stock in a company that another company is attempting to acquire; should I sell my stock immediately? A. In most cases, no. - Any qualified offer to buy your stock will be explained at length in a mailing from the acquirer. Take the time to understand the terms of the offer (Le., the offer price; amount of stock to be purchased by the acquirer, ac-quirer, the offer deadline; and the type of payment-cash, securities, or a combination). . , , : ' Next, watch the stock tables to see how the market reacts. If the market price of the stock moves above the offer, it is possible that , the offer will be increased or a competitive bid will be increased or a competitive bid will be made by another acquirer. If the market stays below the offering bid and you wish to sell, simply accept the offer by returning the proxy card before the expiration date. (Of course, under those circumstances you have no assurance that the offer will not be withdrawn.) Lastly, if you decide to sell, be aware of any potential tax liabilities especially for a cash payment Usually, the exchange of securities' as total or partial payment is tax-free. tax-free. ; -. ! ' Q. Should I contact the company being acquired for information? A. Generally, you will receive extensive written information from the acquirer and, perhaps, , supplemental sup-plemental information from : the company being acquired. Although each company likely will list an information in-formation agent in these materials, you should seek an independent opinion from a financial consultant at a full service firm whose analysts follow the companies and their industry in-dustry ( sectors. . Your decision should be based on what is best for your investment heeds. Q. Is there any one safe strategy to follow? A. No. Each acquisition or - merger must t be evaluated - individually.' in-dividually.' ' However,, many investors who are undecided may "hedge" by selling part of their holdings at the offered price (assuming it is a reasonable offer) and hold the bal- ance pending market developments.' Again, be aware of the tax and jnw vestment y (Consequences, of - your decision. ' . . , . ... yj? Q. What if I own stock in, the company that is buying another business? Should! be concerned? A. Not necessarily, depending on the nature of the transaction. You should check whether the acquisi- tion will dilute your stockholding (that is, if additional stock is being issued to finance the acquisition) or whether the acquisition will require a substantial increase in total debt (borrowing). Also, you should consider con-sider how the acquisition will im-; im-; pact the future of the ; combined ' company and whether it will change . your reactions for owning the stock. |