TERMIUM Plus®

The Government of Canada’s terminology and linguistic data bank.

M&A STRATEGY [1 record]

Record 1 2010-05-14

English

Subject field(s)
  • Investment
  • Stock Exchange
  • Amalgamation and Partnerships (Finance)
CONT

Merger and Acquisition Arbitrage. The most common type of risk arbitrage is the price inequalities that is created when a merger or acquisition is announced. Typically when this happens, the acquiring company's stock price usually drops in case the deal doesn't go through, while the stock price of the company being acquired shoots up close to the offered price (usually at a significant premium to the current traded price). It is interesting to note (and the key to profiting from it) that while the stock price of the acquired company rises, it will never reach the full offered price because there is always a risk of the deal not happening. Therefore, we can take advantage of this by buying stock of the acquired company and as the deal becomes more likely, the stock will rise.

French

Domaine(s)
  • Investissements et placements
  • Bourse
  • Fusion, absorption et coparticipation (Finances)
CONT

Arbitrage sur fusions et acquisitions. [...] cette stratégie consiste à investir dans des entreprises étant engagées dans un processus de fusion ou d'acquisition. La tactique classique consiste à acquérir les actions de la société qui va être rachetée tout en vendant à découvert celles de la société acquérante.

Spanish

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