As-Salam Alaykum Brothers & Sisters,
I am a shareholder of a public company that is in the process of being taken over by Private Equity firm.
The soon-to-be acquired company will become private and shareholders have been given the options to either receive a Cash Offer or partial securities alternative (i.e., unlisted units in exchange for each share, which will allow holders to participate in future value creation and may ultimately deliver greater value than the Cash Offer).
The question is: Will the soon-to-be acquired company (that I hold shares in) become HARAM, given that Private Equity firms use debt, in general, to finance their buyout activities? Or do I need to speak with them directly to find out more?
Private Equity do generally take on a LOT of debt.
JazakAllah khair, Bro UmarA.
I’ll take the Cash Offer! It is better to be safe than sorry.
The following hadith keeps coming to my mind: Al-Nu’man ibn Bashir reported: The Messenger of Allah, peace and blessings be upon him, said, “The lawful is clear and the unlawful is clear, and between the two of them are doubtful matters about which many people do not know. Thus, he who avoids doubtful matters clears himself in regard to his religion and his honor, and he who falls into doubtful matters will fall into the unlawful as the shepherd who pastures near a sanctuary, all but grazing therein. Verily, every king has a sanctum and the sanctum of Allah is His prohibitions. Verily, in the body is a piece of flesh which, if sound, the entire body is sound, and if corrupt, the entire body is corrupt. Truly, it is the heart.”
Source: Ṣaḥīḥ al-Bukhārī 52, Ṣaḥīḥ Muslim 1599