Mergers and acquisitions (M&A)

Financial Times  Jul 21  Comment 
Welcome to Due Diligence, the FT’s daily deals briefing
Insurance Journal  Jul 18  Comment 
Kaplansky Insurance, a Needham, Mass.-based insurance agency, has appointed David Wolberg as vice president of mergers and acquisitions (M&A). Wolberg brings with him experience from the sell-side of mergers and acquisitions. He is licensed to...
WA Business News  Jul 17  Comment 
SPECIAL REPORT: Perth companies Macmahon Holdings and ASG Group have illustrated how contested takeover deals can deliver unexpected outcomes.
The Hindu Business Line  Jul 16  Comment 
The Corporate Affairs Ministry (MCA) is open to suggestions from the public and other stakeholders to further improve the Merger & Acquisition (M&A) framework in company law, a top official s...
SeekingAlpha  Jul 11  Comment 
FiercePharma  Jul 11  Comment 
Even without U.S. tax reforms expected to spur M&A action, biopharma dealmaking hasn’t slowed down—and industry watchers shouldn’t assume it will, one consultant says.
The Economic Times  Jul 11  Comment 
Abercrombie & Fitch ended talks about sale after failing to agree terms with potential suitors.


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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