Sprint Nextel To Acquire Virgin Mobile

[meighty]

Sprint | News Release: Sprint Nextel To Acquire Virgin Mobile USA

I owe a few shares of VM and am curious how this will effect my shares. From what I read...my shares of VM will be converted to Sprint (S) stock at an exchange rate...

The exchange ratio will be subject to a collar such that in no event will the exchange ratio be lower than 1.0630 or higher than 1.3668

Each public stockholder, holding in aggregate approximately 39.7 million shares on a fully diluted basis or 43.3% ownership, will receive Sprint shares having a 10-day average closing price equivalent to $5.50 per Virgin Mobile USA share, subject to the collar referenced below.

Those are quotes from the article.

What exactly does this mean. I'm a bit confused. I'm still new to trading and have never delt with a company being bought. I do know that the stock has jumped over a dollar today so far.

Thanks!

[collegegirl]

wow another merging of two giants, for sure stock holder from each sides are now on alert.

[Stocktrading101]

Yup you are reading that right, with the acquisition you will receive shares of Sprint.

Investopedia explains this more in detail, How do stock-for-stock mergers affect existing shareholders?.

This share swap wont happen though for some time yet until both companies can close the deal. Thus if you do not want to own Sprint shares you can simply sell your VM shares at the current market price. That way you do not have to participate in the conversion at all.