Mergers and acquisitions (M&A)

RECENT NEWS
Canada.com  9 hrs ago  Comment 
Merger and acquisition activity is on the rise globally, and some 40% of Canadian firms expect to grow through M&A over the next three years, according to a survey published Monday by Grant Thornton LLP
MarketWatch  Jul 27  Comment 
Deal making is on a pre-crisis pace after years of subdued activity. While heavier M&A activity is often the sign of a mature bull market, conditions aren’t yet frothy.
Reuters  Jul 25  Comment 
The following bids, mergers, acquisitions and disposals were reported by 1920 GMT on Friday:
SeekingAlpha  Jul 25  Comment 
By Matthew Smith: The M&A activity has really carried this market over the course of the year, as investors have sought guidance anywhere they can get it. As more transactions are announced, market participants view this as the insiders seeing...
Reuters  Jul 23  Comment 
The following bids, mergers, acquisitions and disposals were reported by 2000 GMT on Wednesday:
Automotive World  Jul 23  Comment 
In the first quarter of this year, mergers and acquisitions (M&A) in the global metals industry dropped significantly, sliding to its lowest level in at least six years. Both volume and value of transactions declined during the quarter…. Members...
Reuters  Jul 22  Comment 
(Adds Max Petroleum, Banca Carige, APM Terminals, Healthcare Group Holdings)




 
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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