Question: If I own stock in a company and it is purchased by another company, will my shares go up in value or down?
Also, in the case of Washington Mutual, it wasn't bought out by JPMorgan Chase right?
Answer:
You might want to check and see if the new company honors the old stock.
Neither of the previous two posters have the faintest clue.
"Honors the old stock"? Say what? In the US, when you own stock you own a proportional interest in the company. A new company can't deprive you of your ownership rights anymore than they can steal your car. That's just dumb.
"Depends if it adds value"? Huh? If another company buys your company they buy you out. It makes no difference whether it adds value or not. You are bought out and don't care anymore.
When an acquiring company buys a target company that is publicly traded, they make a takeover offer. This offer is almost always at a substantial premium to the current market price of the company. Once in awhile it is less than the market valuation (then called a "takeunder") but this is very rare. Of course, the reason is that a proportional share of a majority interest has to be worth more than the same proportion of a minority interest. If you own the company, you can paint your picture on the company plane and do circles around Hawaii. If you have just a minority share, you can't get that done very easily.
WAMU was not a takeover and JPM didn't buy WAMU. JPM bought many of the assets of WAMU while WAMU was in bankruptcy and receivership. There is an enormous difference. If JPM had bought WAMU they would be responsible for all the debt of WAMU as well as owning all the assets. In the JPM purchase of the banking subsidiaries, JPM just acquired assets for cash (and not even very much cash, about $2B which was a total rip-off to WAMU shareholders). WAMU also had no choice in the matter as it was the FDIC who sold the assets to JPM not WAMU. The FDIc would have been delighted in JPM wanted to take on all the debts of WAMU (I guess; they would have thought it was certifiably nuts).
Edit: Sigh... " JP Morgan fully acquired Washington Mutual " is not even close to true. Honest to God, it is so hard to post stuff here because the completely wrong information stacks up quicker than anyone can correct it.
In most cases it will go up but it depends on the situation. JP Morgan fully acquired Washington Mutual with the assistance of the Federal Government.
Impossible to say. It depends whether the takeover adds value to the company.