What happens to shares in a company merger?

You have inquired about the handling of shares in a company merger.

When a company is merged, the existing shares are handled through a share exchange.

Accordingly, shareholders can receive new shares in accordance with the merger ratio, or exercise their appraisal right to sell their shares.

For example, if the company merger ratio is 1:0.5, an existing shareholder receives 0.5 of a new company share per share held.

If there are shareholders who oppose the merger, they acquire the right to sell their held shares back to the company.

This is called the appraisal right, and the shares are generally traded at a price slightly higher than the market price.

At this point, if you sell the shares after exercising the appraisal right, capital gains tax may be imposed.

If you continue to hold the shares without selling them, you may, in anticipation of an increase in corporate value after the merger, be allocated shares of the new company at a certain ratio.

In this way, the share-trading strategy may vary depending on the situation of the merging companies and the merger ratio.

Therefore, consulting an M&A attorney and a financial attorney to establish a share-trading strategy suited to your own situation is the wisest course.