Consideration for a takeover or merger can be shares in the bidder (or its parent), cash, loan notes or a combination of these. These each in turn have different tax consequences for the seller.
Consideration for the transaction can also be deferred. The tax implications of such consideration are considered at D6.411.
Share consideration on a takeover or merger
Where the consideration for the takeover or merger is the issue of shares in the offeror company (ie the company performing the takeover), the shareholders in the target company should be entitled to treat the transaction as falling within the exchange of securities provisions (D6.205–D6.209)1.
Consequently they will not be treated as making a disposal of their shares. Instead, the shares they receive in the offeror company will be treated as the same asset as their original shares. It is usual to apply in advance for clearance for such transactions2. See D6.209 for further detail in relation to the advance clearance process.
A takeover or merger
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Web page updated on 17 Mar 2025 16:15