Mergers and acquisitions (M&A)

Reuters  9 hrs ago  Comment 
U.S. syndicated loan financing of $1.326 trillion in the first nine months of 2016 was 11 percent lower than the same period last year and the lowest since 2012 as M&A activity...
Reuters  Sep 30  Comment 
The value of announced mergers and acquisitions (M&A) worldwide fell 27 percent year-on-year to $753 billion in the third quarter of 2016, as apprehension among corporate executives about overpaying prevented a repeat of last year's deal-making...
Forbes  Sep 30  Comment 
Some sales of companies are structured in a way that the sellers’ proceeds vary with post-deal performance of their firms. Even if your firm is a sheet metal shop, every facet of your firm is somehow digitized. Your buyer’s success will...
Reuters  Sep 30  Comment 
The value of announced acquisition deals for Asia-Pacific firms, excluding Japanese firms, dropped 13.4 percent to $790.3 billion in the first nine months of this year,...
MarketWatch  Sep 29  Comment 
Writing in the Guardian, Nathan Schneider digs into the Packers organization’s playbook, suggesting that, rather than selling out to another publicly traded company, Twitter should team up with its users to take the company private.
Insurance Journal  Sep 29  Comment 
Business development managers at Chinese state-owned firms have been put on notice: mess up on M&A deals and you can be held personally liable – for life. Under new rules unveiled by China’s State Council, or cabinet, last month, managers …
Forbes  Sep 28  Comment 
By Siobhán Brett
Reuters  Sep 28  Comment 
The following bids, mergers, acquisitions and disposals were reported by 2000 GMT on Wednesday:
Motley Fool  Sep 27  Comment 
In a world of low oil prices, EOG Resources’ ability to pay a paltry price to bolster its Permian position is remarkable considering what rivals are paying for similar acreage.
Benzinga  Sep 27  Comment 
Twitter Inc (NYSE: TWTR) shares moved up 20 percent on September 23 following press reports that the company had initiated discussions with several media and technology companies that could lead to a formal bidding process. Citi’s Mark May...


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

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki