Mergers and acquisitions (M&A)

RECENT NEWS
Forbes  8 hrs ago  Comment 
I recently moderated the Mergers and Acquisitions panel at the annual meeting of startup founders from Europe and the U.S. backed by Bertelsmann’s Digital Media venture fund, which  our law firm represents. While the discussion covered...
Reuters  12 hrs ago  Comment 
The following bids, mergers, acquisitions and disposals were reported by 2000 GMT on Tuesday:
Forbes  Aug 22  Comment 
After a slight decline in Q3, year over year global M&A activity will stay relatively flat through the end of 2016, according to the Q4 2016 Intralinks Deal Flow Predictor that forecasts the volume of future M&A announcements by tracking...
Forbes  Aug 22  Comment 
Healthcare investors enjoyed a very strong year in 2015: Healthcare M&A reached $546 billion in announced deal value—a 2.5 times increase over the previous decade’s average annual value.
Reuters  Aug 19  Comment 
The following bids, mergers, acquisitions and disposals were reported by 2000 GMT on Friday:
Reuters  Aug 19  Comment 
A growing pipeline of deals buoyed by rising chief executive confidence, a stronger consensus about interest rate hikes and an abundance of available capital point to a...
Reuters  Aug 18  Comment 
The following bids, mergers, acquisitions and disposals were reported by 2000 GMT on Thursday:
Forbes  Aug 18  Comment 
Just when you thought the tech sector couldn't get any more hyper than it already is, word comes that the Internet of Things (IoT) and data analytics -- two emerging cornerstones of the digital economy -- are fueling a feeding frenzy of...
The Economic Times  Aug 18  Comment 
According to assurance, tax and advisory firm, Grant Thornton's latest Dealtracker report, there were 44 M&A deals worth $ 4,083 million in July.
Reuters  Aug 17  Comment 
The family ownership structure of Brazilian pulp and paper firms stands in the way of a potential wave of sector consolidation, industry executives said, as owners...




 
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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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