Mergers and acquisitions (M&A)

RECENT NEWS
Forbes  8 hrs ago  Comment 
Some sales of companies are structured in a way that the sellers’ proceeds vary with post-deal performance of their firms. Integration expert PJ Makhfi of Uniddo says that the process of integration of your company with the buyer's firm...
Reuters  Sep 16  Comment 
NEW YORK, Sept 16 (IFR) - Bayer will be hoping that its US$66bn purchase of Monsanto won't succumb to the same failure that has tripped up many other mergers and acquisitions this year, as regulators...
The Economic Times  Sep 16  Comment 
Shares of Hinduja Foundries slumped 18 per cent on Friday on the back of a 20 per cent fall on Thursday after its board announced merger with Ashok Leyland.
Reuters  Sep 15  Comment 
The following bids, mergers, acquisitions and disposals were reported by 2000 GMT on Thursday:
Yahoo  Sep 14  Comment 
M&As just got more interesting with the announcement that Bayer (BAYRY) is paying $66 billion for Monsanto (MON). Wednesday’s deal was important for two reasons, according to Greg Portell, a partner with management consulting firm A.T. Kearney...
Financial Times  Sep 14  Comment 
Former Autonomy boss invests in Luminance, which aims to cut time spent on due diligence
Clusterstock  Sep 13  Comment 
The word "synergy" is rampant in corporate marriages. One of the main rationales for mergers and acquisitions is that a combined company can be more efficient than the original separate companies by eliminating redundancies and more...
Reuters  Sep 13  Comment 
Insurance executives meeting in Monaco are preparing for another wave of mergers and acquisitions, driven by competition and new money entering the market and driving down...
Reuters  Sep 13  Comment 
The following bids, mergers, acquisitions and disposals were reported by 2000 GMT on Tuesday:




 
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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