Why it is so tough for everyone to understand the deal?
It's black & white in writing: Knight Capital Group Inc. KCG said Wednesday it agreed to be bought by Getco Holding Co. for $3.75 a share in cash or one share of common stock of the new holding company.... You can take $3.75 in cash or if the share of the new holding is higher than $3.75, then you have the right to take that 1:1 deal. So at the minimum, you get at least $3.75 a share... don't sell your shares anything less than $3.75.....
(1) only half of the deal is in cash...the other half is in stock. It will be pro-rata if more than half of the total value is demanded in cash by shareholders
(2) time value of money...when does the deal close? It could still fall-apart and if I take a 3% discount to the 3.75/share offer but can use that cash to make 5% somewhere else with it...then I sell now at the discount
(4) I will have substantial gains but want to lock in at the 15% capital gains rate this year rather than the higher 20% or so rate for gains next year...DUH!
That is up to you. You will be owning the same company as you did before. If you think there is potential in KCG, then hold onto the stock. If not, sell now. I am going to sell part of my position now to lock in the 15% capital gains rate. THe other part I will hold and take stock in the new company.