Mergers and acquisitions (M&A)

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Reuters  1 hr ago  Comment 
CGI Group Inc , the information systems and management consultancy, said on Wednesday it would target acquisitions in cyber security while exiting some markets...
Reuters  5 hrs ago  Comment 
Germany's HeidelbergCement has re-emerged as a global M&A player with the 6.7 billion-euro ($7.4 billion) takeover of Italcementi , after spending the best part of a decade...
Reuters  5 hrs ago  Comment 
Massive acquisition financings are multiplying. Israeli pharmaceuticals firm Teva Pharmaceutical Industries is lining up $27 billion of debt to finance its $40.5 billion...
Reuters  Jul 29  Comment 
The following bids, mergers, acquisitions and disposals were reported by 2000 GMT on Wednesday:
Insurance Journal  Jul 28  Comment 
The Hartford reported core earnings of $389 million for the second quarter 2015, an increase of $245 million from $144 million in second quarter 2014. The increase was due in part to improved underwriting results with lower catastrophe costs in...
Financial Times  Jul 27  Comment 
Even after a $40bn deal, the pharma sector remains unsettled
The Economic Times  Jul 24  Comment 
The equity investment in Mukesh Ambani-owned Reliance Jio is Rs 30,000 crore matched by its current debt, a company spokesman said.




 
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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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