What happens to shares during a corporate merger?

You asked about how shares are handled during a corporate merger.

When a company merges, existing shares are processed through a stock exchange method.

Accordingly, shareholders can either receive new shares based on the merger ratio, or exercise their stock appraisal rights to sell their shares.

For example, if the merger ratio is 1:0.5, existing shareholders will receive 0.5 shares of the new company for each share they hold.

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

This is called the stock appraisal right, and the share price is generally set slightly higher than the market price.

When you sell shares after exercising stock appraisal rights, capital gains tax may also be imposed.

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

As such, depending on the merging companies' situations and the merger ratio, share trading strategies may differ.

Therefore, it is wisest to consult with an M&A attorney and financial specialist attorney to establish a share trading strategy that fits your situation.