Company merger/takeover - what happens to options?

[master_luke]

For example, XYZ offers a takeover on ABC

You hold ABC Options exercisable at $0.20

If the takeover value of ABC was $4 cash per ABC share held
OR 1 XYZ share, for ABC fully paid ordinary shares

Would it mean you would get $3.80 or 0.95XYZ FPO shares for each ABC option held? Given the exercise price of the ABC option was $0.20

 

[master_luke]

Re: Under a company merger/takeover, what happens if you hold options?

well atleast i thought this was a beginner question... anyone?

 

[stoxclimber]

AFAIK it depends on the terms of the option agreement, but usually you are bought out or the option is rolled over into the acquirer at the exchange ratio