Deal spread

Reuters  Jun 14  Comment 
Shares of a number of U.S. companies eyed in high-profile deals are trading significantly below their intended acquisition prices on worries that the deals will die, presenting an opportunity for some big-name investors.


The deal spread is the difference between a company's stock price and the price an acquiring company has agreed to pay, per share, for the company. The deal spread exists only from the time an acquisition is announced, and the time the deal actually closes (a time period which can last several months).

A large deal spread (meaning the company's shares are trading below the acquisition price) indicates investors believe there is a risk the deal, although announced, will fall through. A negative deal spread (meaning the company's shares trade above the acquisition price) indicates investors believe the acquisition price may go up - perhaps because a competitive bidder will arrive.

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