Who receives the money when one company buys another?
I read this article about Bayer buying Monsanto.
The question which came to my mind was: Who receives the money? If Monsanto receives the money, and Monsanto becomes part of Bayer, then doesn't Bayer still have the money? Or does another party like a holding company get the money?
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Shareholders of Monsanto will get the money from Bayer. Shareholders are independent people or entities.
Think of Monsanto as a thing that shareholders had. This thing is now being purchased by Bayer
Monsanto is a publicly traded company that trades under the ticker MON. The stock is owned by a wide range of owner around the world. The buyout offer from Bayer is an all cash offer. Bayer will buy all shares of MON at about 8/share. So if I owned 100 shares of MON, I would receive ,800 or so for my shares. The deal has not yet been approved by regulators, which is why the stock price is hovering around 4/share today.
It's tempting to think of a corporation as a real thing, because in many respects it seems to be. But it isn't a corporeal thing (despite the root word of the name). It may own corporeal things, and employ corporeal people, but it is not itself a real thing.
Borrowing heavily from Prof Joseph Heath:
It might be better to think of a corporation as the nexus of four separate entities: investors who provide capital, employees who do the work, suppliers who provide raw material, etc., and customers who purchase the products or services the corporation buys.
In different organizations the 'owners' are different: in co-ops it's the suppliers, mutual insurance companies the customers, in employee-owned companies the employees, but in 90% of cases (including Monsanto) it's the investors.
The investors who provided capital by buying shares of stock are the owners, and will be compensated. This frequently happens indirectly: You may own Monsanto stock through a mutual fund or other such aggregate which means that your mutual fund will get the money. Whether that winds up being a profit or loss is more complicated.
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