Mergers and acquisitions (M&A)

RECENT NEWS
Reuters  Apr 3  Comment 
(Adds American Airlines, Schneider Electric, Hutchison Whampoa, Brookstone, Americana; updates Deoleo)
FierceBiotech  Apr 3  Comment 
A few days after a similar announcement from GlaxoSmithKline, Sanofi said it plans to scale up its presence in Africa, looking to invest in marketing and R&D in response to the market's continued growth.
Finance Asia  Apr 2  Comment 
As Asia's banks continue to expand their regional footprint, it is only natural that they will keep seeking to buy private banking businesses according to management consultancy Accenture's Beat Monnerat.     
The Hindu Business Line  Apr 2  Comment 
SEBI found these companies violated its regulations and tried to become listed companies without going through an IPO
Reuters  Apr 2  Comment 
(Adds Lufthansa, Eni, RWE, Vodacom, Hypo Real Estate, Yamana Gold, Advent International, Raizen)
The Economic Times  Apr 1  Comment 
CCI has clarified that it will look at the substance of the transaction and not just the structure while approving any merger.
Reuters  Apr 1  Comment 
(Adds ALM Media, Azerbaijan state oil fund, Pernod Ricard, Transdev, MOL)




 
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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