Does the little company stock swap for big company stock? Does the big company stock go up? I know of a small company rumored to being purchased soon by a big company. Which one should I buy stock in ahead of time?
The shareholders of the smaller company may be offered by the larger company:
1) A certain amount of cash per share (normally higher than the price at which the stock was previously trading at BEFORE the purchase of the company was announced.
OR
2) A certain number of shares in the larger company in exchange for a certain number of shares of the smaller company.
The stock price of the larger company may actually go down some when the deal is announced.
March 6th, 2010 at 10:27 am
Generally, you would want to buy the stock of the "little" company, the one being acquired.
References :
March 6th, 2010 at 10:37 am
The shareholders of the smaller company may be offered by the larger company:
1) A certain amount of cash per share (normally higher than the price at which the stock was previously trading at BEFORE the purchase of the company was announced.
OR
2) A certain number of shares in the larger company in exchange for a certain number of shares of the smaller company.
The stock price of the larger company may actually go down some when the deal is announced.
References :