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Rubber Glove companies till year 2023

Author: koolset   |   Latest post: Tue, 13 Apr 2021, 11:35 PM

 

Why share price fall during acquisition (land, factory, company and expansion)

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1. Investors believe the premium paid for the target company is too high (Therefore, investors sold their shares)

2. There are problems integrating different workplace cultures.

3. Regulatory issues complicate the merger timeline.

4. In some cases, management power struggles hamper productivity that leads to poor management and slow progress.

5. Additional debt or unforeseen expenses are incurred as a result of the purchase..

 

 

Lessons:

1. When one company acquires another company, the stock price of the acquiring company tends to dip temporarily, while the stock price of the target company tends to spike by right. 

2. The acquiring company's share price drops because it often pays a premium for the target company (land or etc), or incurs debt to finance the acquisition.

3. The target company's short-term share price tends to rise because the shareholders only agree to the deal if the purchase price exceeds their company's current value. 

4. Over the long haul, an acquisition tends to boost the acquiring company's share price.

 

 

Exceptional rules when acquiring another company:


1. If a target company's stock price recently falls due to negative earnings, then being acquired at a discount may be the only path for shareholders to regain a portion of their investments back.

2. This holds particularly true if the target company is saddled with large amounts of debt, and cannot obtain financing from the capital markets to restructure that debt.

 

 

Pre-Acquisition Volatility

1. Stock prices of potential target companies tend to rise well before a merger or acquisition has officially been announced.

2. Rumor of a merger can trigger volatility that can be profitable for investors, who often buy stocks based on the expectation of a takeover.

3. But there are potential risks in doing this, because if a takeover rumor fails to come true, the stock price of the target company can precipitously drop.

4.Generally speaking, a takeover suggests that the acquiring company's executive team feels optimistic about the target company's prospects for long-term earnings growth.

5. And more broadly speaking, an influx of mergers and acquisitions activity is often viewed by investors as a positive market indicator in order for the company to earn bigger profit in the coming future.

 

 


https://www.investopedia.com/ask/answers/203.asp#:~:text=The%20acquiring%20company's%20share%20price,exceeds%20their%20company's%20current%20value.

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