Shares: acquisition question

mike22

When a company is acquired by another company. What will happen with the shares?

Will it go up, down? Or it does not affect the share price?

Is there a difference between a company is acquired by another company, and a company is bought by another company?

tonygee_3

Have u got some inside info?
There is no golden rule,depends on the offer&sometimes these deals are anticipated
Moreoften the minnows share price will go up and the larger companys will fall

mrposhman

A bit more than "will it go up".

On the announcement, the shares in the acquired company will likely rise. Its more difficult to gauge what will happen to the asquirer as it depends how the market and shareholders see the takeover. Ie. is it a good deal for the comapny etc.

Once the acquisition is completed you will not have any shares of the acquired company any longer. You will either have been given shares in the acquirer (not usually 1-1) or you will have received cash for your shares (normally at a premium but not always, depends on the companies involved) or finally you could have a mixture of the 2.

tradetime

As a rule of thumb, imho, the acquirer usually falls and the acquiree usually rises hence the lucrative business of m&a arbitrage. But as mrposhman points out quite rightly, this is far from a hard and fast rule and can be affected by a lot of factors.