![]() ![]() In other words – if company A is buying Company B’s stock for $10 a share in a few months, why doesn’t Company B’s stock equal $10 immediately following the announcement? Uncertainty Can Lower Prices Stock Prices Can Change Even After A Merger Is AnnouncedĪ common question relative to M&A activity and its affect on stock prices is why the acquisition target’s stock price does not equal the value the acquirer will be paying. How Mergers and Acquisitions Affect Stock Prices M&A activity is common at a market bottom because lower stock prices are attractive to potential acquirers as they look to consolidate competitors and grab more market share. ![]() Similarly, when deal-activity begins to slow it is a signal that prices in the market may begin to move lower. This merger – along with several others – in the second quarter of 2009 were a big tip that the bull market was likely to re-emerge. One of the things we look for when watching for a market bottom is an increase in merger and acquisition (M&A) activity. This happens regularly in mergers but why does this discount exist and is there a way traders can take advantage of it? However, prior to the merger’s completion the share price of Marvel Entertainment, Inc was only $48.37 – a full point below the merger value. The closing prices at the time of the deal meant that Marvel shareholders would have received $49.3998 per share in value for their stock at closing. 745 of a share of Disney for each share of Marvel. The purchase price was originally a mix of $30 in cash and. (MVL) in a deal valued at $4 billion in 2009. The Walt Disney Company (DIS) bought out Marvel Entertainment, Inc. Editor's Note: You can find our complete library of free investing articles here. ![]()
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