Mergers and acquisitions can dramatically impact stock prices and shareholder returns. While some investors receive cash for their shares, others receive stock in the acquiring company, and some deals never close at all. The following examples highlight some of the largest and most well-known acquisitions in recent history, showing how different deal structures affected shareholders and what ultimately happened to their investments.
Every trader and investor knows that corporate shares are constantly changing hands.
Every day, investors around the world trade tens of billions of shares across global stock exchanges, with the New York Stock Exchange alone often processing more than 4 billion shares worth hundreds of billions of dollars in value.
But shares traded aren’t always retail investments or trades. Sometimes, companies acquire other companies by buying up shares.
Recently, in June 2026, FOX announced plans to acquire Roku, while Barry Diller’s People Incorporated proposed an $18 billion acquisition of MGM Resorts.
These deals generated headlines across Wall Street, but they also raised an important question for investors: What actually happens to your shares when a company gets acquired?
In this article, we’ll explain exactly what happens to your shares during a merger or acquisition, how different deal structures work, and examine real-world examples to see how shareholders were affected.
Quick Answer: What happens to my shares after an acquisition?
When a company is acquired, shareholders typically receive cash, shares of the acquiring company, or a combination of both, depending on the terms of the deal. Once the acquisition closes, the acquired company’s stock usually stops trading, and your shares are automatically converted according to the merger agreement.
Key Takeaways – The Mechanics of Mergers & Acquisitions
Before diving into the mechanics of mergers and acquisitions, here are a few important numbers investors should know:
- More than 4 billion shares are traded on the New York Stock Exchange on an average trading day.
- Global M&A deal activity often exceeds $2 trillion to $4 trillion annually.
- Average acquisition premiums typically range from 20% to 40% above a company’s pre-deal share price.
- Elon Musk acquired Twitter for approximately $44 billion in 2022.
- Broadcom acquired VMware for approximately $69 billion in 2023.
- AT&T acquired Time Warner for approximately $85 billion in 2018.
- FOX’s proposed acquisition of Roku values the company at roughly $22 billion.
- Barry Diller’s proposed acquisition of MGM Resorts values the company at approximately $18 billion.
- Twitter shareholders ultimately received $54.20 per share when Musk’s acquisition closed.
- VMware shareholders received $142.50 per share when Broadcom completed its acquisition.
- Acquisition targets often jump 20% or more in a single day after a takeover offer is announced.
- Stocks involved in acquisitions frequently trade below the final offer price until the deal closes due to deal uncertainty and merger arbitrage activity.
Why Companies Acquire Other Companies
Mergers and acquisitions are a common part of financial markets.
According to data from multiple investment banks, thousands of M&A transactions are announced globally each year, with total deal values often exceeding $2 trillion to $4 trillion annually.
Companies pursue acquisitions for many reasons, but most deals are ultimately driven by the goal of increasing shareholder value.
Rather than building new products, entering new markets, or developing technology from scratch, acquiring an existing company can often be faster, cheaper, and less risky.
| Reason | Why It Matters |
|---|---|
| Growth | Acquire revenue, customers, and assets immediately. |
| New Technology | Gain products, patents, and expertise faster than internal development. |
| Market Share | Reduce competition and increase industry presence. |
| Intellectual Property | Acquire valuable patents, trademarks, and proprietary technology. |
| Synergies | Cut costs or increase revenue by combining operations. |
When an acquisition is announced, investors immediately begin evaluating whether the deal will create value for shareholders of both companies.
This is one reason acquisition announcements can cause large price movements in both the acquiring company’s stock and the target company’s shares.
What Happens to Your Shares in a Cash Acquisition?
A cash acquisition occurs when one company agrees to purchase another company for a fixed cash price per share.
Once the transaction closes, shareholders receive cash and their shares are automatically removed from their brokerage accounts.
A recent example is Broadcom’s $69 billion acquisition of VMware, which closed in 2023.
Under the terms of the deal, VMware shareholders received $142.50 in cash per share or a combination of cash and Broadcom stock depending on the election made and proration provisions.
Once the transaction closed, VMware ceased trading as an independent public company and shareholders received the compensation specified in the merger agreement.
This is the most common outcome in a cash acquisition: shareholders exchange their ownership stake for cash, and the acquired company’s shares are removed from public markets.
What Happened To VMware Shares After Being Acquired by Broadcom?
| VMware Shares Owned | Cash Acquisition Price | Value Received |
|---|---|---|
| 100 | $142.50 | $14,250 |
| 500 | $142.50 | $71,250 |
| 1,000 | $142.50 | $142,500 |
What Happens to Your Shares in a Stock-for-Stock Merger?
Unlike a cash acquisition, a stock-for-stock merger does not pay shareholders cash for their shares. Instead, investors receive shares of the acquiring company based on a predetermined exchange ratio.
This is where many retail investors become confused because their shares don’t disappear and turn into cash. Instead, they are converted into shares of another publicly traded company.
A real-world example occurred in 2018 when AT&T completed its acquisition of Time Warner in a deal valued at approximately $85 billion.
Under the terms of the merger, Time Warner shareholders received a combination of cash and AT&T stock.
| Time Warner Shares Owned | Cash Received | AT&T Shares Received | Shareholder Outcome |
|---|---|---|---|
| 100 | $5,375 | 143.7 AT&T shares | Time Warner shares converted into cash + AT&T stock |
| 500 | $26,875 | 718.5 AT&T shares | Investor remained partially invested in the combined company |
| 1,000 | $53,750 | 1,437 AT&T shares | Original Time Warner shares were removed from the brokerage account |
To see how this works in practice, let’s take a deeper look at the 2018 acquisition of Time Warner by AT&T. Time Warner shareholders received $53.75 in cash plus 1.437 shares of AT&T stock for each Time Warner share owned.
An investor holding 100 shares of Time Warner would therefore have received approximately $5,375 in cash and 143.7 shares of AT&T stock when the merger closed.
Their Time Warner shares disappeared from their brokerage account and were replaced by the cash and AT&T shares specified in the merger agreement.
Unlike a pure cash acquisition, shareholders remained invested in the combined company and could continue benefiting from future share price appreciation and dividends.
This is one of the biggest differences between stock mergers and cash acquisitions.
In a cash deal, your investment ends when you receive payment. In a stock-for-stock merger, you remain invested and your future returns depend on the performance of the acquiring company.
Recent Cash & Stock Acquisition Examples
Investors don’t have to look far to find real-world examples of how acquisition mechanics work. Two of the largest proposed deals of 2026 involve Roku and MGM Resorts, and they demonstrate that acquisitions can be structured very differently.
FOX’s Acquisition of Roku
In June 2026, FOX announced a definitive agreement to acquire Roku in a transaction valued at approximately $22 billion.
Under the terms of the agreement, Roku shareholders will receive $96 in cash plus approximately 0.97 shares of FOX Class A stock for each Roku share owned, valuing Roku at roughly $160 per share.
This is an important example because the deal is not a pure cash acquisition.
Instead, Roku shareholders receive both immediate cash and an ownership stake in the combined company.
For example, an investor holding 100 Roku shares would receive approximately:
- $9,600 in cash
- 96.9 FOX shares
The offer represented a premium of approximately 33.7% above Roku’s previous closing price, which helps explain why acquisition targets often experience large price movements after a deal is announced.
| Roku Shares Owned | Cash Received | FOX Shares Received | Estimated Deal Value* |
|---|---|---|---|
| 100 | $9,600 | 97 FOX shares | ~$16,000 |
| 500 | $48,000 | 485 FOX shares | ~$80,000 |
| 1,000 | $96,000 | 970 FOX shares | ~$160,000 |
*Based on the announced acquisition value of approximately $160 per Roku share. The final value received may vary depending on FOX’s share price at closing and any adjustments specified in the merger agreement.
Barry Diller’s Proposed MGM Resorts Acquisition
Another high-profile example emerged in June 2026 when Barry Diller’s People Incorporated submitted a proposal to acquire the remaining shares of MGM Resorts that it does not already own.
The non-binding offer would pay $48.30 per share in cash, valuing MGM Resorts at approximately $18 billion.
At the time of the proposal, People Incorporated already owned roughly 26% of MGM, meaning it was seeking to acquire the remaining 74% of the company.
Unlike the FOX/Roku transaction, this proposal is structured as a pure cash acquisition. If completed, MGM shareholders would receive cash for their shares and MGM would likely cease trading as an independent public company.
The offer represented a premium of approximately 10.6% above MGM’s previous closing price and more than 24% above its 30-day average trading price, highlighting how acquisition offers often reward shareholders with prices above where the stock previously traded.
These two transactions demonstrate the two most common outcomes for shareholders: receiving cash for their shares or receiving a combination of cash and stock in the acquiring company.
Other Real-World Merger & Acquisition Examples
What Happens During a Hostile Takeover?
Most acquisitions are friendly transactions in which the target company’s board of directors supports the deal. A hostile takeover is different.
It occurs when an acquiring company or investor attempts to gain control of a company despite resistance from management or the board of directors.
Hostile takeovers are relatively rare, but they often create significant volatility as investors try to determine whether the deal will ultimately succeed.
One of the most famous hostile takeover attempts in recent history involved Elon Musk’s acquisition of Twitter in 2022.
In April 2022, Musk disclosed that he had accumulated a 9.2% ownership stake in Twitter, making him the company’s largest individual shareholder.
Shortly thereafter, he offered to acquire Twitter for $54.20 per share, valuing the company at approximately $44 billion.
What Happened to Twitter Shares During Elon Musk’s Hostile Takeover?
| Stage | Twitter Share Price | What Happened? |
|---|---|---|
| Before Acquisition Offer | ~$39.00 | Twitter traded normally as a public company. |
| Elon Musk Announces Offer | $54.20 Offer Price | Musk offered to acquire Twitter for approximately $44 billion. |
| Immediately After Announcement | ~$51.70 | Shares surged toward the acquisition price but traded at a discount due to deal uncertainty. |
| During Legal Dispute | ~$32-$50 | Shares fluctuated as investors debated whether Musk would complete the deal. |
| Deal Closes | $54.20 | Shareholders received $54.20 in cash for every share owned. |
| After Closing | N/A | Twitter stock was delisted and shareholders no longer owned shares. |
For shareholders, hostile takeovers often create uncertainty, but they can also result in significant premiums. Twitter shareholders ultimately received $54.20 in cash per share, substantially above the level at which the stock traded before Musk disclosed his stake.
The Twitter acquisition also generated numerous lawsuits and regulatory scrutiny, including allegations that public statements and disclosure timing affected Twitter’s stock price during negotiations.
While those allegations remain debated, the case highlights how hostile takeovers can become far more complex than a typical merger agreement.
The key takeaway is that shareholders are usually affected by the final terms of the deal, regardless of whether the acquisition is friendly or hostile.
Why Stocks Often Rise After Acquisition Announcements
When a company announces that it is being acquired, the target company’s stock often rises immediately.
This happens because acquisition offers are typically made at a premium to the current market price, giving shareholders an incentive to approve the transaction.
According to data from investment banks and merger research firms, the average acquisition premium in North America often falls between 20% and 40%, although premiums can be much higher in competitive bidding situations.
For example, if a company is trading at $100 per share and receives a buyout offer for $130 per share, investors know they may eventually receive $130 if the deal closes.
As a result, the stock price often jumps sharply higher following the announcement.
Acquisition Offers & Premium Examples
| Pre-Deal Share Price | Acquisition Offer | Premium |
|---|---|---|
| $100 | $120 | 20% |
| $100 | $130 | 30% |
| $100 | $140 | 40% |
However, the stock price usually does not rise all the way to the acquisition price immediately. Instead, it often trades slightly below the offer price until the transaction closes.
This gap exists because investors recognize that acquisitions can fail.
Regulators may block the deal, financing may fall through, shareholders may reject the transaction, or one of the parties may attempt to renegotiate the terms.
For example, if a buyer offers $50 per share, the target company’s stock might trade at $48 or $49 while investors wait for the deal to close. This difference is known as the merger arbitrage spread.
The smaller the spread, the more confident investors are that the acquisition will be completed. Conversely, a larger spread often indicates that investors believe there is a greater risk the deal could collapse.
As the closing date approaches and uncertainty declines, the target company’s stock typically moves closer and closer to the final acquisition price.
Once the transaction closes, shareholders receive the agreed-upon cash, stock, or combination of both, and the acquisition process is complete.
What Happens if the Deal Falls Apart?
M&A deals can fail for a variety of reasons, including regulatory challenges, financing issues, legal disputes, or shareholder opposition.
When this happens, the target company’s stock often falls sharply because investors are no longer expecting to receive the acquisition premium.
For example, imagine a stock is trading at $40 per share before a buyout offer is announced. If a buyer offers $50 per share, the stock may rise to $48 or $49 while investors wait for the deal to close.
However, if the acquisition is cancelled, the stock could quickly fall back toward its pre-deal price.
This is why acquisition targets rarely trade exactly at the offer price before closing. Investors always assign some probability that the deal could fail, creating the merger arbitrage spread discussed earlier.
Deal Risk Example: Why Acquisition Stocks Trade Below the Offer Price
If a company receives a $50 buyout offer but trades at $48, the market is pricing in both the potential reward and the risk that the deal fails.
| Scenario | Stock Price Outcome | Result for Buyer at $48 |
|---|---|---|
| Deal Closes | Shareholders receive $50 | +$2 per share, or +4.2% |
| Deal Fails | Stock falls back toward $40 | -$8 per share, or -16.7% |
That imbalance is why merger arbitrage is not “free money.” The upside may be only a few percent, while the downside can be much larger if the acquisition collapses.
Do Mergers and Acquisitions Make Good Trading Opportunities?
For investors, mergers and acquisitions can create attractive opportunities. For traders, however, the opportunity is often less straightforward.
Unlike earnings momentum trades, merger arbitrage trades often produce smaller returns but may have a higher probability of success when the deal has already been approved by management, shareholders, and regulators.
When an acquisition is announced, the target company’s stock frequently gaps higher on the news.
Research shows that acquisition premiums often range from 20% to 40%, meaning much of the potential gain may occur before most traders have an opportunity to react.
That said, merger announcements can still create opportunities through merger arbitrage.
This strategy involves purchasing shares of the target company after an acquisition is announced and profiting if the stock price moves closer to the final acquisition price before the deal closes.
For example, if a company receives a buyout offer of $50 per share and the stock trades at $48, a merger arbitrage trader may buy shares and potentially earn approximately 4.2% if the transaction successfully closes.
For most retail traders, the biggest risk is assuming an acquisition is guaranteed to close.
If regulators block the transaction, financing falls through, or negotiations collapse, the target company’s stock can quickly lose the acquisition premium and fall back toward its pre-deal price.
As a result, mergers and acquisitions can create profitable trading opportunities, but they also introduce a unique form of risk: the risk that the deal never happens.
Conclusion – How M&A Deals Affect Stock Prices
The most important takeaway is that shareholders are not left empty-handed when a company is acquired.
Depending on the structure of the deal, investors typically receive cash, shares of the acquiring company, or a combination of both.
Before investing or trading around a merger or acquisition, take the time to understand the terms of the deal.
Knowing whether shareholders will receive cash, stock, or both can help you better evaluate the risks, potential rewards, and what will ultimately happen to your shares if the transaction closes.
At the end of the day, the mechanics of a merger matter just as much as the headline itself.
Understanding those mechanics can help traders and investors make more informed decisions the next time a company they own becomes an acquisition target.
If you want to go deeper:
- Explore the Trading Statistics Hub to understand how different sectors behave across market cycles
- Study real setups inside the Trade Reviews section
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Frequently Asked Questions
What happens to my shares after an acquisition?
When a company is acquired, shareholders typically receive cash, shares of the acquiring company, or a combination of both, depending on the terms of the deal. Once the transaction closes, the original shares are removed from the shareholder’s brokerage account and replaced with the agreed compensation.
Do I lose my shares in a takeover?
Yes. After a takeover is completed, the target company’s shares usually stop trading and are removed from your brokerage account. However, shareholders receive compensation according to the merger agreement, so your investment is not simply lost.
What happens to stock during a company merger and acquisition?
The outcome depends on how the deal is structured. In a cash acquisition, shareholders receive cash for their shares. In a stock-for-stock merger, shareholders receive shares of the acquiring company. Some deals include both cash and stock.
Why do acquisition target stocks usually rise?
Acquisition offers are often made at a premium to the company’s current market value. Research shows that acquisition premiums frequently range from 20% to 40%, which is why the target company’s stock often jumps after a deal is announced.
Why doesn’t the stock immediately trade at the acquisition price?
Investors know there is always a chance that the deal could fail due to regulatory concerns, financing issues, or shareholder opposition. As a result, acquisition targets often trade slightly below the final offer price until the transaction closes.
What happens if the acquisition fails?
If an acquisition is cancelled, the target company’s stock often falls sharply because investors are no longer expecting to receive the acquisition premium. In many cases, the stock may return toward its pre-announcement trading price.
What happens to stock options when a company gets acquired?
Stock options are typically adjusted, converted, accelerated, or cashed out based on the merger agreement. The exact treatment depends on the terms of the transaction and whether the options are vested or unvested.
Are shareholders required to approve acquisitions?
Many acquisitions require shareholder approval, particularly large mergers and stock-for-stock transactions. However, some deals can be completed without a shareholder vote depending on the structure of the transaction and applicable corporate laws.
Are mergers and acquisitions good trading opportunities?
They can be. Some traders attempt to profit from merger arbitrage by buying shares below the acquisition price and holding them until the deal closes. However, these strategies carry risk because acquisitions do not always succeed.
Do shareholders pay taxes when a company is acquired?
Potentially. Cash received in an acquisition may trigger capital gains taxes depending on your cost basis, holding period, account type, and local tax laws. Investors should consult a qualified tax professional regarding their specific situation.
References
AT&T Inc. (2018). AT&T completes acquisition of Time Warner Inc. Retrieved from https://about.att.com
Broadcom Inc. (2023). Broadcom completes acquisition of VMware. Retrieved from https://www.broadcom.com
Federal Trade Commission. (n.d.). Mergers and acquisitions. Retrieved from https://www.ftc.gov
Institute for Mergers, Acquisitions and Alliances (IMAA). (2025). M&A statistics. Retrieved from https://imaa-institute.org
Microsoft Corporation. (2016). Microsoft to acquire LinkedIn. Retrieved from https://news.microsoft.com
Microsoft Corporation. (2023). Microsoft completes acquisition of Activision Blizzard. Retrieved from https://news.microsoft.com
Reuters. (2022, October 27). Elon Musk completes $44 billion acquisition of Twitter. Retrieved from https://www.reuters.com
Reuters. (2026, June 15). FOX agrees to acquire Roku in approximately $22 billion transaction. Retrieved from https://www.reuters.com
Reuters. (2026, June 1). Barry Diller’s People Incorporated proposes approximately $18 billion acquisition of MGM Resorts. Retrieved from https://www.reuters.com
U.S. Securities and Exchange Commission. (n.d.). Mergers, acquisitions, and tender offers. Retrieved from https://www.sec.gov
New York Stock Exchange. (2025). NYSE market statistics and trading volume data. Retrieved from https://www.nyse.com
Yahoo Finance. (2022). Twitter, Inc. (TWTR) historical market data. Retrieved from https://finance.yahoo.com
Yahoo Finance. (2026). Roku, Inc. (ROKU) historical market data. Retrieved from https://finance.yahoo.com
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