What happens if there is a buyout for a company that I own shares with using Freetrade, then they offer just stock or stock/cash but Freetrade dont offer the buyers company stock???
If they offer cash - then it is easy, you will simply get the cash.
If they offer shares, I would assume Freetrade will add that parent company to their universe imminently.
Maybe someone from Freetrade could elaborate if there are other possible scenarios
What about when they offer other things besides stocks or cash?
Just as examples I was reading that sometimes they offer bonds, options, preferred stocks etc. to come along. How would be handled this kind of extras?
That’s what happened when Virgin Money were bought by CYBG
As @Rat_au_van mentioned, we will look to facilitate as many corporate events as possible and if this means adding stocks to our universe then we will try to make this our first option.
The only instances where we might not be able to offer the outturn of a takeover is if the outturn stock is trading on a market that we don’t currently offer, if it cannot be held electronically or if it’s not tradable. The worst possible outcome would be to end up with an overseas certificate that we cannot trade in.
As part of our daily controls, we review all the announcements and upcoming events for the stocks held within our universe. This is to make sure we are prepared for any upcoming corporate actions and if we needed to add any stocks to our universe then we can do so well ahead of the effective date.
I know that what I’m asking is probably something that doesn’t happen every day but I’m very curious to know.
As I was mentioning earlier in case of a buyout or merger besides the normal cash and stock all kind of other things might be attached to it.
As mentioned in this article:
“Merger securities are non-cash asset paid to the shareholders of a corporation that is in the process of being acquired or is the target of a merger. These securities generally consist of bonds, options, preferred stock and warrants, among others.”
I would like to know what will happen to them if I receive them?
How the whole thing will be handled?
Where can I buy/sell them in case I want/have them? Where this things even trade?
For simplicity let’s assume that this happen in a supported stock exchange since it is already complicated enough as it is.