Mergers and acquisitions (M&A)

RECENT NEWS
Reuters  5 hrs ago  Comment 
The following bids, mergers, acquisitions and disposals were reported by 1330 GMT on Friday:
SeekingAlpha  Aug 25  Comment 
Benzinga  Aug 25  Comment 
In a new report, analysts at BNP Paribas discuss the disconnect between rising corporate bond yields and the elevated level of M&A deals and buybacks. According to BNP, buyback levels, M&A deals and corporate bond yields cannot all continue to...
Forbes  Aug 25  Comment 
Yesterday’s steep declines in global equity markets, precipitated in large part by ongoing woes in China, are a cause for concern, but aren’t likely to have a major impact on the overall pace of dealmaking as we head towards 2016.
Insurance Journal  Aug 25  Comment 
JLT Risk Solutions AB, a member of the Jardine Lloyd Thompson Group plc, has appointed Magnus Toftgård and Magnus Lindgren to strengthen the Credit, Political and Security Risks (CPS) and M&A Insurance (M&A) division, based in Stockholm. Magnus...
Reuters  Aug 25  Comment 
The following bids, mergers, acquisitions and disposals were reported by 2000 GMT on Tuesday:
Financial Times  Aug 24  Comment 
Slow and steady suddenly looks appealing again
Reuters  Aug 24  Comment 
Wealthy Gulf Arabs' love of boutiques doesn't just apply to fashion, but increasingly to their choice of financial advisers as well.




 
TOP CONTRIBUTORS

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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