How to handle the Block (SQ:NYSE/SQ2:ASX) acquisition of Afterpay (APT:ASX)

It looks like shareholders will be receiving some news with further details on Square’s (SQ:NYSE) takeover of Afterpay (APT:ASX):

This thread will be updated once the scheme booklet is released and we can advise further for APT shareholders on how to handle this in Sharesight.

In the meantime, feel free to put any discussions on the potential of this merger in the thread :grinning:

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For Afterpay shareholders, your new Block shares will start trading from February 2 as per the scheme booklet.

Depending on whether you’ve taken up the CDI offer for SQ2:ASX or the US shares SQ:NYSE, you will need to implement this in Sharesight from February 1st. As these are shares for a new holding, it will need to be handled manually in Sharesight. Follow our guide below for how to handle this takeover:

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I’m entitled to 281.25 shares in SQ2 but Commsec doesn’t recognise fractional shares and so I’ve been allocated 281.0 shares. Not a biggie but I’m missing $44 at todays prices.

@t-bridge This might be something you’d want to take up with Commsec.

For a lot of you who are converting APT into SQ2 you may notice your gains on your new SQ2 holding. This is expected behaviour, as the unrealised performance of your new SQ2 holding is based on the price at the time of the merge.

For those using the Unrealised CGT report, this may also appear as a short term gain as per the above ruling.

If you were to sell this holding, the realised gain will be based on the original cost base for APT and reflected in the CGT report. If you apply for long term gains, this will be reflected from the date you purchased APT on the CGT report, showing as long term gains. An example of how this would look is below:

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I don’t believe this has anything to do with CommSec. The Scheme Implementation Deed covers this in Section 4.5

4.5 Fractional elements
(a) If the number of Afterpay Shares held by a Scheme Participant at the Record Date is such that the aggregate entitlement of the Scheme Participant to Scheme Consideration comprising New Square Shares or New Square CDIs includes a fractional entitlement to a New Square Share or New Square CDI, the entitlement will be rounded as follows:
(i) if the fractional entitlement is less than 0.5, it will be rounded down to zero New Square Shares or New Square CDIs; and
(ii) if the fractional entitlement is equal to or more than 0.5, it will be rounded up to one New Square Share or New Square CDI.

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