A merger was announced today and then the stock of the company that is getting bought out keeps going up and people keep buying it.
Do they see some kind of benefit to it being in a merger and what could that benefit be.
Also, i read in the merger article that the shares might each be bought for 9 dollars each, But they have gone up from 9 in the morning to 12 dollars.
Speculation is the short answer.
Most of the time a "highly probable" merger at a "fair price" moves toward the "fair price" in giant step at the announcement and then slowly crawls toward the exact offer price as the merger date gets closer and closer. (See the BNI merger with BRK.A, as an example)
OTOH, in the case of a "less probable" merger and/or a "less or more than fair price" the price will bounce around as market players try to out guess each other on what the ultimate deal will be.
That is a long way of saying that all announcement are not created equally. Some are done deals before they are announced and some never happen.
Speculation is the short answer.
Most of the time a "highly probable" merger at a "fair price" moves toward the "fair price" in giant step at the announcement and then slowly crawls toward the exact offer price as the merger date gets closer and closer. (See the BNI merger with BRK.A, as an example)
OTOH, in the case of a "less probable" merger and/or a "less or more than fair price" the price will bounce around as market players try to out guess each other on what the ultimate deal will be.
That is a long way of saying that all announcement are not created equally. Some are done deals before they are announced and some never happen.
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