How do I record a "merger of equals"

L3 just merged with Harris Corp. The merger is considered a "merger of equals". My broker removed L3 shares from my account and then added 1.3 times as many shares back to my account under the new ticker. How do I record this transaction?

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  • volvogirl
    volvogirl SuperUser ✭✭✭✭
    Look for Corp. Acquisition transaction.   I found you have to manually calculate how many new shares you got for each ONE old share. Took me 3 times to notice that part.
  • Kimbyya
    Kimbyya Member ✭✭
    Thank you for your quick response. I should have added that when Quicken downloaded the merger transaction from my brokerage Fidelity, it downloaded it as two transactions, which is also also how Fidelity shows the transactions. Quicken automatically showed the two transactions' Actions as 'Boughtx' and 'Soldx' with zero cost.

    The Corporate Acquisition (stock for stock) transaction does not really fit with the LLL transaction. LLL and Harris combined to become a new company called L3Harris. See the attached image for how the transactions look on Fidelity's website. I have no information on price per share. I only know that my number of shares of L3 reduced to zero and then 1.3 times as many shares for the new company were added to my account.

    This is so confusing to me. I wish Quicken provided much more info on how to handle these things. At this point, I'm feeling like there is no transaction available to correctly reflect this type of merger.

    Any help you can provide is
    much appreciated.
  • Kimbyya
    Kimbyya Member ✭✭
    In reading about the merger, the merger is described as a "merger of equals". L3 and Harris combined to become a new company called L3Harris. If you were an L3 shareholder, which I was, you received a number of shares in the combined company equal to 1.3 times the number of L3 shares that you held. The news articles indicates that this was not an acquisition but a merger.

    The attached image shows how the transaction in my account appears on Fidelity's website.
    (Note that the "-- "to the right of the transaction description represent the amount of the transaction or in this case, 0.) When Quicken downloaded the merger transaction from my brokerage Fidelity, it downloaded it as two transactions, which is also also how Fidelity shows the transactions. Quicken automatically showed the two transactions' Actions as 'Boughtx' and 'Soldx' with zero cost. I know this is not correct.

    Someone suggested I use the Quicken transaction type "Corporate Acquisition (stock for stock)" but it does not seem applicable (as again, the reporting shows this transaction as merger not an acquisition). This type of transaction wants you to enter acquiring company, company acquired, new shares issued and price per share for acquiring company.

    When looking at my Fidelity positions, I still have the same tax lot history as before. On the surface, it just looks like a "name change" and adjustment to my share balance. I realize though that it is obviously more than a name change, but for purposes of Quicken, I'm thinking I should maybe treat it as a name change and simply change the ticker (if Q will let me do that) and adjust the share balance.

    Any help is very much appreciated.

    Kim
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