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Acquisition

Acquisition is a corporate action used when one company is bought by another company. If Company A purchases Company B, the shareholders of Company B can receive either shares of Company A, a cash payment, or a combination of both. Positions in Company B are removed from shareholders’ portfolios.

To run an acquisition, follow one of the instructions depending on the type of consideration provided to shareholders.

Full position payout

If the consideration (cash, shares, or both) applies to 100% of a shareholder’s holdings, use the corporate action workflow to process the acquisition. This removes entire position in the acquired company from the shareholder’s portfolio.

  • Cash offer or tender offer – Shareholders receive cash and the positions of Company B are removed from portfolios. Follow the steps below to run a corporate action using the "Other" option: Run cash and share payments in an acquisition.

  • Share for share – Shareholders receive new shares and the positions of Company B are removed from portfolios. Use the Exchange corporate action. For details, see Exchange.

  • Mixed – Shareholders receive both new shares and cash and the positions of Company B are removed from portfolios. First, record the cash payment using the steps below: Run cash and share payments in an acquisition. Then, process the share exchange using the Exchange corporate action. For details, see Exchange.

Partial position payout

If shareholders receive consideration (cash and/or shares) for only part of their holdings, use the Create transactions from positions option in the Positions view to process partial cash payments and/or partial share exchanges.

Run cash and share payments in an acquisition

To record cash payouts in the acquisition:

  1. Create a corporate action (New → Corporate action → Other).

  2. Fill in the fields:

    Corporate action type*

    Enter "Acquisition" or another name to identify the corporate action type and search for the corporate action in the Corporate actions view.

    Security*

    The security of the company that was acquired.

    Amount per share

    The amount to pay out to the shareholders. Specify the amount per unit of the security.

    Transaction type

    The transaction type for the transactions to be created.

    • If shareholders receive cash, create a transaction type that is the same as Dividend (DIV) and has the Amount effect = "Reduce amount". Give it a descriptive name. For details about creating a transaction type, see Transaction types.

    • If shareholders receive both new shares and cash, create a transaction type that is the same as Dividend (DIV) to pay out the cash. Give it a descriptive name. For details about creating a transaction type, see Transaction types. Position exchange in this case is handled at the next step when you run the exchange corporate action.

  3. Run or schedule the corporate action for all portfolios that own the asset.

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