2006-11-16 05:48:59 · 4 answers · asked by A M 2 in Business & Finance ➔ Investing
If a company wishes to acquire another, that company needs to offer a price that will entice the stock holders to accept the offer. From the acquiring company's standpoint if it is an exchange of stock offer, it does not cost the company any money to acquire the other company. They are just issuing more paper. You will often read about the dilutive effect on the acquiring company's earnings from the aquisition. Managements are under preasure to grow their sales and earnings. One supposedly simple way to do this is to acquire another company, then fire the support personel to cut overhead. However, it very often does not work out that way.
2006-11-16 06:06:59 · answer #1 · answered by Anonymous · 0⤊ 0⤋
To get those share holders who are not offering their shares for sale to so. Let's say I want to buy 40% of Sony Corp. But in the stock market, only 30% are available at the price of $50/share.
So I offer $60/share, hoping that some dormant share holders would be interested and sell their shares to me. Hence I get my 40% of the company.
Hope it made sense to you.
2006-11-16 13:58:38 · answer #2 · answered by ---Ã?--- 1 · 0⤊ 0⤋
No rationale at all. Acquirer pays what they have to to get the target.
2006-11-16 17:40:07 · answer #3 · answered by vegas_iwish 5 · 0⤊ 0⤋
There is none in most cases. The vast majority of mergers and acquisitions destroy shareholder value.
2006-11-16 14:50:56 · answer #4 · answered by NC 7 · 0⤊ 0⤋