Mergers and acquisitions (M&A)

Euromoney  1 hr ago  Comment 
Debt service costs will hit profits; regulators see M&A as the answer.
Reuters  Nov 25  Comment 
(Adds Telecom Italia, Clarkson, Lucchini, Air France, Schoeller-Bleckmann)
MarketWatch  Nov 25  Comment 
Twitter CFO Anthony Noto proved to the world last night that he himself uses the social network he helps run -- arguably a little too liberally. Noto accidentally blasted out to his 9,000 followers Monday night what appeared to be intended as a...
Finance Asia  Nov 25  Comment 
China remains the engine for Asia's M&A market, though Southeast Asia has developed into an important component too.
Benzinga  Nov 24  Comment 
Shares of Sarepta Therapeutics Inc (NASDAQ: SRPT) are in play on Monday amid consolidation announcements within the sector. On Monday, BioMarin Pharmaceutical Inc. announced the company will acquire Prosensa Holding NV for roughly $680...
Reuters  Nov 24  Comment 
The following bids, mergers, acquisitions and disposals were reported by 2100 GMT on Monday:


How Stocks react to M&A

When companies announce that they are going to be buying other companies, the stock prices of both institutions react. However, they don't usually react the same way. One stock price typically goes up while the other stock price typically goes down.

The Price of One Stock Goes Up

The stock that usually benefits the most from a merger or an acquisition is the stock of the company that is being acquired. In most cases, the stock price of the company that is being acquired goes up.

The reason the stock price of the company being acquired typically goes up is the company that is doing the acquiring usually pays a premium for the stock of the company it is acquiring. For instance, when Pfizer announced it was going to acquire Wyeth, the price of Wyeth stock jumped higher.

The Price of the Other Stock Goes Down

The stock that usually benefits the least—at least in the short term—from a merger or an acquisition is the stock of the company that is doing the acquiring. In most cases, the stock price of the company doing the acquiring goes down.

The reason the stock price of the company doing the acquiring typically goes down is the company is taking on increased risk by acquiring the new company. Companies involved in mergers and acquisitions like to talk about the "synergies" the combination of the two companies will create, but there are no guarantees combining two companies will result in improved performance and profits

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