Mergers and acquisitions (M&A)

Reuters  2 hrs ago  Comment 
The following bids, mergers, acquisitions and disposals were reported by 1100 GMT on Friday:
The Economic Times  5 hrs ago  Comment 
French information technology services firm Atos SE led a rally in tech stocks after unveiling a deal to buy Xerox Corp's IT outsourcing arm.
Financial Times  Dec 18  Comment 
Premiums in important lines have tumbled to lowest level in a decade
Reuters  Dec 18  Comment 
(Adds BNP Paribas, One Equity, Deere, Aer Lingus, Grupo Bimbo, Roche; updates Alcatel Lucent)
Finance Asia  Dec 17  Comment 
John Tivey, partner at White & Case, talks to FinanceAsia about his outlook for mining and metals M&A in 2015.
Reuters  Dec 17  Comment 
(Adds Shire, Carrefour, Clessidra, CMVM, Snam, Eni, Lala, Lucchini and KGHM)
Automotive World  Dec 16  Comment 
As the need for lightweighting brings composite materials into more vehicles, mergers between material and tooling suppliers is on the rise The post Increase in composites pushes further M&A of supply base appeared first on Automotive World.
Reuters  Dec 16  Comment 
(Adds, Jefferies Group, Lafarge, Raiffeisen Bank)


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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