The announcement of merger or acquisition shares information that is new to the capital markets. First, for an all-stock deal that is certain to go through, accouchement effects are defined by the note and describes the fundamental arbitrage relationship between Buyer and Target stock prices.
It demonstrates how post-announcement prices may be used to infer the market's estimation of synergies. It then explains the betas of the two companies switch post-announcement and the arbitrage relationship between prices in a cash-and-stock deal. Eventually, it clarifies how it influences the costs of the Target and the Buyer and defines occasion danger.
PUBLICATION DATE: December 03, 2007 PRODUCT #: 208103-PDF-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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