Millenium cash tender offer

[huangd02]

Hello,

Can anyone educate me about a cash tender offer? I have shares of Millenium Pharmaceuticals and Takeda has offered to buy it up at 25 dollars a share in a cash tender offer. I received a notification in the mail that I need to call my brokerage to accept the cash tender offer by May 8th. What would happen if I did not accept the cash tender offer? What risks are involved? My friend who also owns shares says he wants to hold on to them until next year to avoid short term capital gains. What are the ramifications of this? Thanks.

-Dan

[Stocktrading101]

Originally Posted by huangd02

Hello,

Can anyone educate me about a cash tender offer? I have shares of Millenium Pharmaceuticals and Takeda has offered to buy it up at 25 dollars a share in a cash tender offer. I received a notification in the mail that I need to call my brokerage to accept the cash tender offer by May 8th. What would happen if I did not accept the cash tender offer? What risks are involved? My friend who also owns shares says he wants to hold on to them until next year to avoid short term capital gains. What are the ramifications of this? Thanks.

-Dan

I would say just accept the cash tender offer and walk away. Every buy out is different. More then likely, if you don't take the cash offer then you will be given shares of the new company in exchange.

The risk is that the new company sucks and the stock goes to hell. Also in very rare cases the deal can fall through or get price adjusted and you can lose money (or gain money) that way.

A good example of someone taking the money is recent with Bear Stearns. As soon as the offer got raised to $10 a share the Chairman sold all of his stock (or a massive chunk of it) on the open market.

Hope that helps a bit!

[alr]

My understanding of this is that is if a majority of shareholders accept the initial offer then the merger will go through and at that point you will be offered another opportunity to sell your shared for the same 25 dollar price. I don't think receiving takeda stock is an option in this case. Basically, you can take the offer, or nothing else. The other thing you can do is sell you shares on the open market right now, and this price is nearly the same, since it is over 24 per share. At any rate you are going to be hit with taxes. I don't think there is any avoiding this.