Re: Buy out/Merger of two companies

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Posted by Willis Dillon on January 18, 2007 at 22:50:24:

In Reply to: Re: Buy out/Merger of two companies posted by Mark on January 17, 2007 at 20:05:14:

: : I don't know if I recorded the recent buyout of BellSouth by AT&T in my portfolio correctly or not. I own both of them.
: : I treated the buyout of BellSouth's total value as a return of Capital. I then took the value received and used it for the total purchase value of the new AT&T shares.
: : Other than the cash for partial share of AT&T, I think this should then be regarded by FM as a non-taxable event.
: : I didn't see any other way to handle it--If there is please advise.

: Hi Willis,

: Another way is to use a split transaction. The ratio for a split can be anything you want, so you can record a split with a ratio of:

: for

: You can then just rename this investment to the new name. This has the added benefit of keeping all your historical returns/buys/sells, instead of starting over with a single purchase in a new investment.

: Thanks,
: Mark
: --
: Fund Manager - Portfolio Management Software

After I change the name of BellSouth to AT&T I now have two separate AT&T investments appearing in my sub-Portfolio which I don't particularly want. How can I merge these two investments into one? Do I need to revert back to the way I originally outlined above? In the past I have always used cost averaging to determine my cost basis.

Replies:

• Re: Buy out/Merger of two companies Mark 23:25:29 01/18/07 (0)