What happens to Volta (VLTA) stock price now that it is being acquired by Shell?
The short answer is that Volta stock’s price will likely rise.
At least in the short-term.
By now, you have heard the news: Shell is acquiring Volta for $169 million through a full cash purchase. The transaction is set to close in the first half of 2023.
So, you may have a lot of questions.
A few of them might be: what happens to the stock price now? Will it rise or fall? When will the deal be approved? What happens to my shares when it happens?
Here are some brief answers:
Typically, when one company acquires another, the target company’s stock rises because the acquiring company pays a premium for the acquisition, so it can provide an incentive for the target company’s shareholders to approve the acquisition.
In this case, Shell has offered to acquire Volta at $0.86 a share. The stock will likely rise up to near the full deal price as the closing date of the transaction approaches. The main reason for this is because the shareholders will only agree to the deal if the purchase price exceeds their company’s current value.
On the other hand, the acquiring company’s stock (in this case, the Shell stock), usually falls immediately following an acquisition.
That is because the acquiring company often pays a premium for the target company, exhausting its cash reserves and/or taking on significant debt in the process.
What happens to my shares after the closing?
There is no closing date yet. Volta has not announced one and there is also the possibility that the deal may not go through as the shareholders have to vote to approve it.
Regardless, if you hold your shares through the transaction date, you probably won’t have to do anything. Shell announces that the transaction will be paid in cash.
Therefore, the shares should disappear from your account on the date of closing, and be replaced with cash. It’s that simple.
In conclusion, the stock price of Volta will likely rise since Shell will pay a premium on its share as a way to entice shareholders. However, the stock price of Volta may also fall on the news since Volta has been going through financial turmoil and, as a result, is being bought at a discount.