How to handle data on company mergers

[GreatPig]

Just wondering how people handle their share price data in charting software after a company merger.

For example, when SIG merged with AWP to give SIP, you had totally unrelated data for SIG and AWP, and then had to create data for SIP.

In such a case, would you:

- Leave SIP with just the data since the merger?

- Merge SIP with only one of SIG or AWP and ignore the other?

- Somehow merge the SIG and AWP data together to get historic data for SIP?

If you use a data provider that does all this sort of stuff for you, what did they do for that particular merger?

Cheers,
GP

 

[Prospector]

Hi
I use 'My Portfolio Planner' and as I had SIG shares like you say, this is what they said to do for their software:

If you did not hold shares in Arrow before the merger - that is you only held shares in Sigma then do the following.

1. At the merger date, enter a split for your Sigma shares. The split ratio is for each 1000 you now have 4436 shares. Your holding in Sigma will increase to 3327.
2. Change the share code (in the Maintenance group) for Sigma to Arrow (AWP).

Does this help in anyway?

 

[GreatPig]

Thanks Prospector.

Did it say what to do if you had shares in both Sigma and Arrow before the merger?

(I didn't have either - this is just to see how the data should be handled in this sort of scenario).

GP

 

[Prospector]

No worries - if I had shares in both I had to contact them again! Maybe it takes them a bit longer to work that one out!

 

[bullmarket]

Hi GreatPig

I'm not exactly sure how data providers handle recalculating historical data for merged companies but I doubt there is a one-size-fits-all method as it would most likely depend on the type of merger....ie...whether the predator was very much larger or similar size, or even smaller than the target company.
I guess it could also depend on whether the predator paid for the target with cash only, script or a combination of both and the subsequent affect on gearing and maybe other fundamentals as well.

I suppose in most cases the historical share for a merged company is some kind of pro-rated combination of the pre-merged company share prices according to the type of merger that took place.

In the case where Westfield stapled their 3 WDC, WFT and Westfield America Trust (can't remeber its old code) trusts the unit price of the new stapled WDC remained the same as the pre-stapled WDC since unitholders of the pre-merged WDC received only 1 unit in the new WDC for each pre-merged WDC unit they held. So in this case there was no change to the WDC historical data.

cheers

bullmarket