Why does the SP of a takeover company go down? - Aussie Stock Forums

Results 1 to 3 of 3
  1. #1

    Default Why does the SP of a takeover company go down?

    Let me display, again, that which I do not know..... I understand why the share price of a company which has been taken over goes up.
    However, in my naivety, I would have thought that the takeover company, by its actions, is actually indicating a position of strength in taking over a smaller competitor and that, in so doing, it is actually placing itself in an even stronger position.
    As an example, since AGK announced a takeover action its SP has continued to drift south.
    Why is it so?

  2. #2
    Mod: Call me Dendrobranchiata prawn_86's Avatar
    Join Date
    May 2007
    Los Angeles
    Blog Entries

    Default Re: Why does the SP of a takeover company go down?

    Probably a multitude of reasons opinions.

    Takeover wont go through, therefore have wasted time effort and money in pursuing the bid

    Takeover goes through but cannot integrate the 2 co's effectively

    etc etc

    Basically people being pessimistic about the future because it is unclear...

  3. #3

    Talking Re: Why does the SP of a takeover company go down?

    There is an imediate transfer of wealth from the company making the offer to the shareholders of the company accepting the offer thus in the short term the company making the offer is worth less and the shareholders of the company being bought are worth more. The reason the company making the offer is prepared to put up with this is that they believe long term they will be worth more as the benefits of owning the acquisition flow to them

Similar Threads

  1. Kevin Rudd
    By somesortoftrader in forum General Chat
    Replies: 2260
    Last Post: 9th-September-2015, 11:58 AM
  2. FER - Fermiscan Limited
    By scsl in forum Stocks 0-H
    Replies: 246
    Last Post: 9th-February-2012, 03:24 PM
  3. QGC - Queenland Gas Company
    By malachii in forum Stocks Q-Z
    Replies: 329
    Last Post: 6th-March-2010, 03:52 PM
  4. Exercising company issued options (i.e. not ETOs)
    By cuttlefish in forum Derivatives
    Replies: 2
    Last Post: 27th-March-2008, 02:40 PM
  5. Replies: 7
    Last Post: 14th-February-2008, 10:50 PM


Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
Aussie Stock Forums