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[Nittany Ned2]

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[WestSideLion]

Usually a merger comes with stock details. Will PBCT shareholders receive MTB shares? If so, at what rate per PBCT share?

My guess is that PBCT shareholders will be compensated for any lost future dividend income in the merger offer. That may be why you’re seeing the price pop right now. That arbitrage opportunity had likely already passed and PBCT will remain priced as is.

 

[IrishHerb]

Thanks as well. I have been trying to employ a dividend aristocrat strategy, buy and hold, DRIP.

I have a lot of reading/studying to do. How does this affect my cost basis, holding period, tax implications, etc.?

I guess you could figure it out. But often the brokerage that holds your stock will be able to give you a detailed list of your holdings including date obtained, at what cost, current value, gain or loss.

 

[sluggo72]

Thanks as well. I have a lot of reading/studying to do. How does this affect my cost basis, holding period, tax implications, etc.?

According to this
People’s United shareholders will receive 0.118 shares of M&T for each People’s United share owned, a premium of 13% based on Friday’s closing price. M&T shares closed at $155.27 Monday, up 3.5%. Shares of People’s United jumped 14.9% to settle at $18.02.
There shouldn’t be any tax implications due to this merger unless you sell, either stock this yr. as noted if you hold it in a brokerage account they should adjust your basis which should be the same now but adjusted. You have x in the stock, you wil still have x

 

[heckmans]

Thanks. The last stock I held that was involved in a merger in didn't go so well. I'm trying to figure out how to evaluate these types of situations.

Just to be clear, this isn't a merger, exactly - PBCT is being acquired and will cease to exist.
At some point, PBCT stock will convert to MTB stock at a rate based on valuations.
Here's the question..do you want to be an M&T Bank stock holder?
In all likelihood, dividend policy will follow what MTB does.
You just got a 15% bump. If you don't think you want to be a MTB shareholder, sell now. If you think the merger will make a stronger company and opportunity for growth, hold it.

As others have stated, there are no tax implications until you sell. Your PBCT stock will be converted to MTB stock at what appears to be about a 1-10 ratio. Your cost basis will be converted as well. You aren't helped or hurt from a tax standpoint.
To illustrate this another way.
Let's say you bought 10 shares of Google at $1000 each.
Google then does a 10-1 stock split.
Now you'd own 100 shares of Google at a cost basis of $100.

In this scenario, Google created 10X the amount of stock and so it devalued each share by 90%. Your value and overall coast basis remain unchanged however.
The same situation exists with an acquisition...you stock will convert.. Regardless of the conversation rate, your overall value and cost basis will remain the same.

 

[WestSideLion]

Just to be clear, this isn't a merger, exactly - PBCT is being acquired and will cease to exist.
At some point, PBCT stock will convert to MTB stock at a rate based on valuations.
Here's the question..do you want to be an M&T Bank stock holder?
In all likelihood, dividend policy will follow what MTB does.
You just got a 15% bump. If you don't think you want to be a MTB shareholder, sell now. If you think the merger will make a stronger company and opportunity for growth, hold it.

As others have stated, there are no tax implications until you sell. Your PBCT stock will be converted to MTB stock at what appears to be about a 1-10 ratio. Your cost basis will be converted as well. You aren't helped or hurt from a tax standpoint.
To illustrate this another way.
Let's say you bought 10 shares of Google at $1000 each.
Google then does a 10-1 stock split.
Now you'd own 100 shares of Google at a cost basis of $100.

In this scenario, Google created 10X the amount of stock and so it devalued each share by 90%. Your value and overall coast basis remain unchanged however.
The same situation exists with an acquisition...you stock will convert.. Regardless of the conversation rate, your overall value and cost basis will remain the same.

You ask the key question. Larger, slower growth companies usually buy smaller, faster growth companies. This can be done as a way to generate better ROIC than possible organically or to simply expand territory or even snuff out a potential competitive threat early.

In my experience, the acquiring company often does worse as an investment. Financial Services may be even more structurally likely to underperform.

 

[GregInPitt]

I guess you could figure it out. But often the brokerage that holds your stock will be able to give you a detailed list of your holdings including date obtained, at what cost, current value, gain or loss.

Yep, if you are with a reliable modern brokerage firm, such as Fidelity, TD Am..., directly after the transaction completes whatever shares you have in the surviving company will show up in your account with the correct cost basis. I have investments from 30+ years ago that have transferred companies, been transferred between multiple brokerage firms,..... and the correct cost basis is right there for when I would want to sell it.....

So you can use your free time for something else.....