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Merger/Acquisition Question
Old 07-02-2018, 01:20 PM   #1
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Merger/Acquisition Question

I own 168 shares of Pinnacle Foods (PF) in a *Taxable Account*
The vast majority of the shares (160) were purchased in late 2015 & early 2016 so the gains would be ‘long term’

Last week, Con-Agra (CAG) acquired the company.
I'll receive 0.6494 shares CAG, & $43.11 cash for every share of PF.

My total cost basis for the 168 shares is $7,080.67 or $42.06 per share
Total Gain: +$3,821.22

How will the $7,242.48 cash payment be treated when it come to taxes ?

Thanks
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Old 07-02-2018, 03:26 PM   #2
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It could be dividend or reduction in basis. ConAgras website should include discussion of tax treatment on their website, investor section.
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Old 07-02-2018, 03:37 PM   #3
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Right, I'd think stockholder/investor relations should be giving guidance on this, or would be the ones to ask. It could also be a CG distribution, which is essentially the same as a dividend tax-wise, isn't it?
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Old 07-02-2018, 04:24 PM   #4
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Checked @ both websites & couldn't find the answer.
Emailed Pinnacle. Will post if/when they reply.
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Old 07-02-2018, 05:02 PM   #5
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It is early yet. Deal just announced but you might be able to get response from Conagra investor relations.
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Old 07-02-2018, 05:34 PM   #6
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Not saying this is the way this new transaction will occur but this previous treatment may give some idea what structure to look for:

https://www.conagrabrands.com/invest...ff-information
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Old 07-02-2018, 07:28 PM   #7
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You should definitely follow guidance of the company on how to treat the merger. FWIW, here is some general Schwab advice on cash&stock mergers
https://www.schwab.com/public/file/P.../spt010960.pdf
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