Mergers and acquisitions (M&A)

RECENT NEWS
Reuters  4 hrs ago  Comment 
The following bids, mergers, acquisitions and disposals were reported by 1330 GMT on Tuesday:
The Hindu Business Line  Jul 21  Comment 
Mergers and acquisitions transactions have been excluded from the ambit of related party transactions (RPT) provision in the new company law. A clarification to this effect has now been issued...
FiercePharma  Jul 21  Comment 
Talk about peer pressure. First, a couple of U.S. drugmakers pull off trans-Atlantic deals that shift their official HQs and lower their tax rates. Next, some bigger names go for the same tax-inversion strategy. Now, investors want to know why...
Reuters  Jul 21  Comment 
(Adds Club Mediterranee, PEP, Aurelius, CBS Outdoor, BSkyB)
Forbes  Jul 20  Comment 
On Friday, U.S. drug company AbbVie (ticker: ABBV) finalized its purchase of Shire Pharmaceuticals (ticker: SHP.L) of the UK and Ireland for $54 billion. The deal is the poster child of both the hot pace of global M&A activity and the somewhat...
The Hindu Business Line  Jul 20  Comment 
Cash-rich companies are beginning to focus on investments, says Grant Thornton report
The Hindu Business Line  Jul 19  Comment 
Mergers and acquisitions transactions have been excluded from the ambit of related party transactions (RPT) provision in the new company law. A clarification to this effect has now been issued by...
Clusterstock  Jul 18  Comment 
Jeremy Grantham has published his latest quarterly letter to GMO clients. In it, he continues to deliver his message of caution, warning that the stock market is expensive and is priced to deliver paltry returns for years to come. And he...
Reuters  Jul 18  Comment 
NEW YORK, July 18 (IFR) - Bankers are welcoming the heady surge in M&A activity but the bond markets are unlikely to get as big a piece of the pie as in years past, as borrowers make more use of both...




 
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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