2006-12-14 17:12:21 · 4 answers · asked by Davey 1 in Business & Finance ➔ Investing
The problem with the takeover company stock is when the announcement is made the price starts creeping up to higher levels. If you buy before it has reached the peak then you will be OK otherwise it won't be worth it. You won't be able to predict the takeover candidate prior to the announcement. Sometimes the media speculates on take overs which might not work out and taking such stocks might not be benificial.
For a buyout company you mean Leveraged buyouts some times the acquirer will sell off assets to pay of debts which will diminsish assets of the company. Also there can be possibility of them giving you a check at a value not liked by you. In US though it might work equitably you probably will get a good value like the market price of the stock. What you might miss out in such instances is the value that can be precieved of the combined entity. So LBO's are also not good choices.
If you can time a takeover candidate right then it can be benificial. Takeover companies are good in the long run because the acquirer extracts the synergies in combining two entities.
2006-12-14 18:46:38 · answer #1 · answered by Mathew C 5 · 0⤊ 0⤋
more often than not at the same time as C buys A, C is paying a accurate price for A. the fee / percentage of A will upward thrust to on the point of the providing cost by C. contained in the couple of minutes period C's $/percentage will in all possibility fall till after the buyout is complete. in words of a merger, it thoroughly relies upon upon the merger contract. the various extra universal transactions are a million) stocks of one employer are traded 2:a million, 3:a million, 5:2 , even 3:5 for stocks of the hot employer. 2) stocks of one employer are purely offered out, 3) some mix of both. regularly the proprietors of the smaller employer, in both case, make out nicely on the buyout, mergers.
2016-11-26 20:33:47 · answer #2 · answered by axtell 4 · 0⤊ 0⤋
They are both good investments as long as the incoming company is in good financial standing. Look at their profit margins and projected income and go from there.
2006-12-14 17:14:46 · answer #3 · answered by J. R 3 · 0⤊ 0⤋
Liquidate your position. You do not know squat about the purchasing company.
2006-12-15 00:49:16 · answer #4 · answered by Anonymous · 0⤊ 0⤋