Broker wants to buy back stock over value (Kapitalmaßnahme Übernahme)?
Broker wants to buy back stock over value (Kapitalmaßnahme Übernahme)?
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tim · External communityPost link
External question — Personal Finance Stack Exchange
Author: tim
Original post: https://money.stackexchange.com/questions/151161
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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My online broker approached me with a "Kapitalmaßnahme Übernahme - Ausschreibung". As I understand it, they want to buy the stock I hold in a specific company (US01609W1027). The offer is over value (they offer 113, while the stock stands at below 100). There is a deadline (in September) until which I can respond.
My question:
What can I do with this? It seems that I could - right now or in the next couple of weeks/months - agree to the offer, offload the stock for the fixed price, and immediately buy new stock for the current (lower) price. That looks like a no-risk, 100% certain win, which doesn't seem right.
Who is making this offer, and why are they making it? It seems like a fixed offer in the future which others can accept or decline at any given point in time will always turn out badly for the one making it?
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Solarflare · External communityPost link
External answer — Personal Finance Stack Exchange
Author: Solarflare
Original post: https://money.stackexchange.com/a/151207
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
Adaptation: HTML converted to plain text; contact email addresses removed.
This is part of the US$ 25 billion buy back program
Alibaba announced for their stock
:
Hangzhou, China, March 22, 2022 - Alibaba Group Holding Limited (NYSE:
BABA and HKEX: 9988, the “Company”) today announced that the Company’s
board has authorized to upsize its share repurchase program to US$25
billion from US$15 billion (the “Share Repurchase Program”), in a sign
of confidence about the Company’s continued growth in the future. The
Company also announced that Weijian Shan, executive chairman of
investment group PAG, was appointed as an independent director to the
Company’s board.
The Share Repurchase Program will be effective for
a two-year period through March 2024. As of March 18, 2022, the
Company had purchased a total of 56.2 million American depositary
shares under the previously announced share repurchase program, for a
total consideration of approximately US$ 9.2 billion.
Obviously, they do not go to the stock market and place a market order for 100 million shares, but make an offer to institutions to buy large amounts, and those institutions are now trying to get it done (by offering you or your broker or a partner of your broker an incentive).
Since "only" less than 10% of the stock is bought back, it makes sense that the offer value is not a lower bound for the stock (since not everyone can sell for that price). On the other hand, the offer price needs to be above the stock price, otherwise noone would sell.
The actual price has probably been defined some time ago, and the whole project has a time horizon until 2024, so daily price movements are not that relevant for their planings (but of course for your personal profit). It's (part of) the premium that Alibaba is ready to pay to get this large transaction done, and the institutions have their own ways of securing their deal and margin.
You are basically among the lucky 10%, and yes, it looks like it is basically free money if you just buy it back on the stock market.
You should check the conditions of the offer though. There may e.g. be a first-come-first serve condition attached (so it may run out, cause, well, it's free money), they may be allowed to lower/stop the offer at any time, or you may only get the money in september (so you would need to have the liquidity available now to buy it now). But it's also likely that there are no complications attached, as both sides get what they want - you some money, Alibaba or some intermediate institution their buy-back quota filled.
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Quoted from Forex.com.bd-Editorial External answer — Personal Finance Stack Exchange Author: Solarflare Source score (net votes, not local likes): 3 Original post: https://money.stackexchange.com/a/151207 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. This is part of the US$ 25 billion buy back program Alibaba announced for their stock : Hangzhou, China, March 22, 2022 - Alibaba Group Holding Limited (NYSE: BABA and HKEX: 9988, the “Company”) today announced that the Company’s board has authorized to upsize its share repurchase program to US$25 billion from US$15 billion (the “Share Repurchase Program”), in a sign of confidence about the Company’s continued growth in the future. The Company also announced that Weijian Shan, executive chairman of investment group PAG, was appointed as an independent director to the Company’s board. The Share Repurchase Program will be effective for a two-year period through March 2024. As of March 18, 2022, the Company had purchased a total of 56.2 million American depositary shares under the previously announced share repurchase program, for a total consideration of approximately US$ 9.2 billion. Obviously, they do not go to the stock market and place a market order for 100 million shares, but make an offer to institutions to buy large amounts, and those institutions are now trying to get it done (by offering you or your broker or a partner of your broker an incentive). Since "only" less than 10% of the stock is bought back, it makes sense that the offer value is not a lower bound for the stock (since not everyone can sell for that price). On the other hand, the offer price needs to be above the stock price, otherwise noone would sell. The actual price has probably been defined some time ago, and the whole project has a time horizon until 2024, so daily price movements are not that relevant for their planings (but of course for your personal profit). It's (part of) the premium that Alibaba is ready to pay to get this large transaction done, and the institutions have their own ways of securing their deal and margin. You are basically among the lucky 10%, and yes, it looks like it is basically free money if you just buy it back on the stock market. You should check the conditions of the offer though. There may e.g. be a first-come-first serve condition attached (so it may run out, cause, well, it's free money), they may be allowed to lower/stop the offer at any time, or you may only get the money in september (so you would need to have the liquidity available now to buy it now). But it's also likely that there are no complications attached, as both sides get what they want - you some money, Alibaba or some intermediate institution their buy-back quota filled.
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