What Happens to stock when...

[Kimi706]

I am new to stocks and have a question..

Company A could possibly be bought by Company B. They are both publicly traded companies. What happens to Company A's stock?

My thought is if i bought company A's stock it would be turned into company B's stock, but that would seem to easy.

Any help is appreciated!

[Fredledingue]

It's easy indeed: You receive stocks from Company B, automaticaly. You have nothing to do or to worry about.
You will also recive cash for a fractional share if the number of Co. B stock is not round.

[Stocktrading101]

The best way to maximize being bought out may simply be to sell straight away and "walk". The time it takes for deals to pend and actually go through so you can get your new shares may take months so.

At the time the buyout is announced the stock price of the purchased company skyrocket to their newly found value. I say sell right then and there and move on.

The only advantage of not selling and holding on are the capital gains taxes. Any sold stock for a profit must be accounted for with the gov .