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It was announced in October of 2018, that IBM will acquire Red Hat (RHT) for 190 per share. I have shares of RHT. Current price is in the 180 range. What will happen next?

Will my shares be converted to IBM shares? If so, where can I locate the conversion factor? If not, will I eventually "force sell" at 190? Is there any risk to sitting on the shares, or could it potentially fall apart, falling in price, and I should consider selling now?

marked as duplicate by Dheer, Nathan L, Rupert Morrish, JoeTaxpayer Mar 18 at 22:04

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Yes, it was announced in October of 2018, that IBM will acquire Red Hat (RHT) for $190 per share.

In January, Red Hat shareholders "approved the adoption of the agreement and plan of merger, dated as of October 28, 2018".

IBM expects to close the deal in the latter half of 2019.

You can sell for approximately $182 now or you can wait and receive $190 per share in cash when the deal goes through.

  • So if a person keep sitting on the shares, the shares will be force sold? And eventually, one day person will get 190 usd on the one's deposit? – Michel_T. Mar 18 at 12:45
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    On the day that the deal is consummated, the shares will disappear from your brokerage account and $190 in cash will replace it. – Bob Baerker Mar 18 at 12:51
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    I'll add that, in general, there remains a small risk that a deal doesn't go through, even if both companies involved in a merger approved a deal and both anticipate it would close by some time frame. Sometimes deals are not approved by regulators, or other stuff happens which could cause a deal to be cancelled. This risk is why there is often a not so insignificant gap between the current price of a company to be acquired and the agreed upon cash deal price. The time value of money only explains part of such a gap. – Chris W. Rea Mar 18 at 13:39
  • @Michel_T. If you actually have the Red Hat share certificates in hand, you are responsible for handling the conversion. That's usually done by sending them to some address, and you'll get IBM certificates back. Strictly speaking, if all you want to do is hang on to them, you don't have to convert them immediately. You can hold on to the Red Hat shares for years and as long as IBM exists, you can convert them into IBM shares. I wouldn't recommend that, but just know that you don't have to act immediately. You will have to convert them to sell them. – Mohair Mar 18 at 22:16
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    @mohair - It's an all cash deal – Bob Baerker Mar 18 at 22:54

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