O2 buyout: what to do with your shares
When Spain’s Telefonica made a 200p a share offer to buy UK mobile operator O2, it was offering to pay a 22% premium to the share price.
When Spain's Telefonica made a 200p a share offer to buy UK mobile operator O2, it was offering to pay a 22% premium to the share price.
That sounded great at the time, but now that the deal is confirmed, things are a bit more confusing.
Telefonica is offering two options to investors. They can either sell their shares direct to the firm when the deal completes (which is expected to happen in Janaury 2006), or they can take a "loan note alternative", which allows them to sell their shares to Telefonica over a period of time. The latter is designed to help prevent investors being caught by a sudden, unexpected capital gains tax bill by using up all their tax-free allowance in one go. The notes must be redeemed in multiples of £1,000 over the relevant years, but interest (which will be taxed as income) will be paid on them, so that investors do not lose out by not having the money immediately.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
So what's the right thing to do? The answer depends on your tax situation: if you need to manage your capital gains liability, the loan option is a good one. But if your profits from the investment (now valued at 200p) are within your £8,500 CGT limit and you haven't any other gains to take into account, there's no reason not to bank your profits now.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Annunziata was a deputy editor at MoneyWeek, covering financial markets, politics, economics and comment pieces. She then went on to the Daily Telegraph as a lead writer where she wrote a column on young women’s financial issues. She was briefly a member of the European Parliament for the East Midlands region in the UK as part of the Conservative Party. Annunziata continues to write as a freelance journalist.
-
Why Chinese stocks are so far out of favour
There’s little appetite for Chinese stocks despite low valuations.
By MoneyWeek Published
-
The 62 UK areas where you could be priced out of using your Lifetime ISA
Saving for your first home in Croydon, Ealing, Brent or any one of these other locations? You could be at risk of being priced out of using your Lifetime ISA
By Katie Williams Published