You've probably already heard about Westpac's plans to take over Australia's fifth largest bank, St George Bank. If successful, the deal would create Australia's biggest bank by market capitalisation with a combined customer base of 10 million people and would account for a quarter of the home loan market.
Westpac is offering 1.31 of its shares for each St George share, which values the takeover target at around $19 billion. The board of the St George Bank obviously likes the sound of that offer, as it's recommending shareholders take up the opportunity.
This deal has left many people in the market throwing up questions like "Will the banks maintain their unique identities and market positions?", "What will this do for competition in the banking sector?" and "What will happen to the 37,000 employees?".
While they're all important questions to be asking, one question I'd like to pose is "What do you do if you hold shares St George Bank?".
Let's face it, takeover attempts aren't uncommon, and investors with any more than a handful of stocks in their portfolio have likely been through a takeover attempt in the recent past - successful or otherwise. And those that haven't, well, it's still likely to happen!
So what should you do if happens to you?
Well, I always reckon the best thing you can do if a company you have shares in receives a bid, is not to panic. These things don't happen overnight so you'll usually have weeks to think about what you'll do, and there'll usually be weeks of wrangling as the target company tries to negotiate a better deal for its shareholders.
One of the first steps you should make is to do some research on your company, if you're not already up to scratch with your company's affairs. Check out the company's announcements on their website or on the ASX website (www.asx.com.au), and read the papers to see what's being said in the media about the deal.
Once an offer's on the table, you'll be sent a document from the bidder, known as the "bidder's statement", followed by a recommendation from your company directors advising you to accept or reject the bid, known as the "target's statement". As a general rule, the best time to accept is just prior to the closing date and after the bid's been declared unconditional.
At the end of the day, if you're still not sure what to do, it's a good idea to see either a trusted and reputable financial advisor or licensed stockbroker. Check out the ASX website for a list of stockbrokers if you're not sure who to choose.