Lesson # 12 : The Market and acquisitions, takeovers

When mergers and acquisitions take place various things can happen in the market.

For instance, if an Indian company is taking over a global counterpart then the Indian market would rise.

If a global counterpart is buying out an Indian company then the share of that Indian Company would rise.

Similarly, if two corporations decide to merge then the one which gets greater benefits from the merger sees a larger rise in price.

Remember if a smaller company is being bought by a larger company then the smaller company is the one which is bound to rise in price and not the larger company.

Sometimes, it may happen that the price of the larger company may decline as the shareholder’s may feel that the parent company’s decision to buy a smaller company is simply going to add to that company’s liabilities.

If a company decides to split it’s company into various sectors then the sector which generates the maximum revenue will see the largest rise in the price of shares.

Mergers and acquisitions are bound to affect the market irrespective of the size and volume of the trade.  In some cases it is positive and in some negative.

Loads of money

Udit Sabahrwal { On behalf of Doodle inc}