How Do I Handle When Company I Own Stock In Gets Bought Out

[Jason]

It was announced yesterday that CYNO has agreed to be purchased by Hologic for $66.00 per share. Shares spiked $14.43 yesterday to $65.93.

Being that shares are pennies away from ultimate buyout share, I figured I should sell and re-invest as shares are going to stagnate until official date and I should put this money to work.

However, within hours of announcement, a lawsuit was filed as to whether Cynosure explored market sufficiently before agreeing to sale.

My question:

(1) Is this type of lawsuit par for the course:
(2) If I sell now, am I protected if future price escalates;
(3) What would you do or how have you handled this type of situation;

Thank you in advance for your input.

[Jason]

A little research and I got some feedback:

(1) Tax implications: I bought within the last year, so I will pay higher tax at this point. If I wait and merger drags past one year anniversary, I save;
(2) Possibility of Bidding War: Self-explanatory

[Jason]

Now I'm lost. The stock is trading higher than the buyout number.

[George the original one]

The lawsuit is "normal", in that someone with deep pockets always disagrees with the buyout and thinks they can make some profit on the case.

Price significantly above buyout agreement suggests you're seeing the expectation of a potential bidding war. I'd probably sell into it.

[Jason]

Thank you that was very helpful .

Stock is now at 66.15 - .15 above buyout price.

When you say Sell into it, are you suggesting to sell before a competitive bid is made ?

[George the original one]

Yes. Because the sale is a certainty rather than a possibility and the time-value of money suggests you can put it to work elsewhere for a more reliable profit.

15 cents is a minute fraction of $66, so not worth writing home about. Significantly above buyout price would be like $68.

[Dragline]

I'm not sure I would sell it -- kind of depends on what I thought of the buyer. Last year I owned a forestry REIT called PCL that got bought by Weyerhauser (WY). Although there was a dip at the closing of the transaction, it kept going up after that.

If you do nothing usually you just end up with shares in the new company (if the new company is public).

[Jason]

Thanks for the feedback.

This happened to us last year in the same sector however our stock was not converted into the purchaser stock.

My inclination at this point is just to sell and find something new .