Merger Securities

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DEFINITION of 'Merger Securities'

A non-cash asset paid to the shareholders of a corporation that is being acquired or is the target of a merger. Theses securities generally consist of bonds, options, preferred stock and warrants, among others.

INVESTOPEDIA EXPLAINS 'Merger Securities'

Merger securities can become undervalued when large investment firms are required to sell them as a result of their strict investment requirements. For example, a large mutual fund may receive stock options from an acquiring company when one of the companies held in its portfolio is purchased. If the fund has a policy against holding options, it may be required to sell them, which can then cause the price of the options to fall to very low levels.

RELATED TERMS
  1. Bond

    A debt investment in which an investor loans money to an entity ...
  2. Acquisition

    A corporate action in which a company buys most, if not all, ...
  3. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  4. Warrant

    A derivative security that gives the holder the right to purchase ...
  5. Mergers And Acquisitions - M&A

    A general term used to refer to the consolidation of companies. ...
  6. Merger

    The combining of two or more companies, generally by offering ...
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