Warrant is the right to purchase stocks of companies established within a certain period in the future at a certain price. If you exercise your rights only if the future stock price rises you will definitely gain a profit. There are many things that are used in stock options, maintaining the shareholding ratio of the founder of the venture company before the public offering. It will be issued as an incentive to investors. It and creditors that there is negative factors such as low interest rates and low dividend rate, you become a thing of the order to have the acceptance of the preferred stock. If the outlook is bright the warrants will be even more attractive. When a warrant is issued, the exercise price will be higher than the current market price. It will not be issued except in case of granting it as stock option to officers etc. of the company, convertible bonds or issuing it as bond with warrants. When the price of the stock falls through the exercise period of the warrant, the warrant will be worthless. In this way, the use of the case of M & A you may exercise of the warrants has a big meaning.
You can also exercise warrants with M & A
If performance recovers by gradually investing when acquiring a business with poor performance, you can exercise your right to raise the investment ratio. Also, in cases where performance is not recovered, there are ways such as waiver. “Qatar Holding” is an economically rich Qatar Government fund, under the umbrella of the Qatar Investment Authority, but the warrant of the British international financial group “Barclays” that Qatar Holding possessed was held in 2012 We sold all in November. As a result, Qatar Holding gained about 2.7 billion yen in profit. The company was sold to Deutsche Bank and Goldman Sachs Group, but it was immediately sold. But Qatar Holding continues to be the largest shareholder of Barclays with a 6.7% stake. Because the exercise of warrants has great influence in this way, you can also use warrant exercise in the case of M & A.